The UK Manufacturing Comeback is being signalled, with output expanding for the first time in a year in October. This positive shift in the UK manufacturing growth trajectory was significantly boosted by the phased restart of operations at automotive giant Jaguar Land Rover (JLR) following a disruptive cyber-attack. However, contrasting economic trends are evident across the Atlantic, where US manufacturers continue to report significant headwinds, primarily driven by persistent tariffs impacting their exports and increasing input costs. This news highlights the complex and often divergent economic realities facing major industrial nations and the global manufacturing trends at play.
UK Manufacturing Comeback: First Growth in a Year
In October, the S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI®) climbed to a 12-month high of 49.7, an improvement from 46.2 in September. While this figure remains just below the crucial 50.0 mark that separates contraction from expansion, it signals a notable stabilization and a return to growth in production volumes, a key indicator for the UK Manufacturing Comeback. Output increased in both consumer and intermediate goods industries, with a stronger performance in the latter partly attributed to the resumption of JLR’s production lines, a positive development for the automotive industry.
Jaguar Land Rover, Britain’s largest car manufacturer, had been forced to halt operations following a significant cyber-attack that began in late August. The JLR cyber attack led to a multi-week shutdown, impacting its extensive supply chain and causing an estimated £1.9 billion in potential damage to the UK economy, with the company reportedly losing tens of millions of pounds per week in revenue. The gradual reopening of JLR facilities in mid-October provided a much-needed uplift for automotive component suppliers and other manufacturers reliant on its operations. This news offered a welcome, albeit potentially temporary, reprieve for the UK Manufacturing Comeback.
Despite this encouraging headline figure for the UK manufacturing growth, deeper analysis of the survey data reveals underlying challenges. Total new business has contracted for the thirteenth consecutive month, and new export orders have seen a decline for the forty-fifth month in a row. This indicates that the October output growth was partially achieved by firms working through existing backlogs and increasing their inventories of unsold goods, rather than a surge in new demand. Business optimism has risen to an eight-month high, yet it still sits below its long-run average, with manufacturers expressing caution about the future economic outlook and domestic policy uncertainties regarding the UK Manufacturing Comeback.
US Manufacturing Slowdown Amidst Tariffs Impact
Across the pond, the picture for US manufacturers in October was one of continued contraction, showing a distinct US manufacturing slowdown. The Institute for Supply Management (ISM) reported its manufacturing index fell to 48.7, marking the eighth consecutive month of decline. This trend is strongly linked to the ongoing tariffs impact, which manufacturers cite as a primary concern. These trade barriers are reportedly hindering international trade, leading to a significant drop in new export orders for the fourth successive month and impacting sales to key markets such as Canada, China, and Europe.
The elevated tariffs have also contributed to a steep rise in input prices, increasing the cost base for businesses. This inflationary pressure, coupled with falling demand, has led to an unprecedented increase in unsold finished goods inventories. Manufacturers are finding that production volumes are increasingly insufficient to meet weaker-than-anticipated sales, particularly in export markets, raising concerns about potential future production cutbacks due to supply chain issues. Employment growth has remained modest, with manufacturers trimming their workforces, and overall business confidence has dipped, reflecting unease about trade policy uncertainties.
Divergent Trends in Global Manufacturing
The contrasting performances in October underscore the complex and evolving global economic environment and global manufacturing trends. The United Kingdom’s manufacturing sector experienced a much-needed boost from the resolution of a major operational disruption at JLR, temporarily pulling it out of a year-long contractionary trend and signalling a potential UK Manufacturing Comeback. However, persistent weakness in overall demand and export markets continue to pose significant challenges for UK manufacturing growth. Meanwhile, the United States manufacturing sector remains mired in a slowdown, with tariffs impact acting as a significant drag on exports, driving up costs, and contributing to a build-up of unsold inventory. As these divergent trends continue to unfold, they will shape the trending narrative for global business in the coming months, with manufacturers in both nations keenly watching for policy shifts and signs of sustained demand recovery.
