Chris Barlow, head of manufacturing at MHA, comments on today’s S&P PMI data:

“The rise in manufacturing PMI to above 50, the first time since September 2024, has certainly come as a welcome surprise, suggesting that there are tentative signs that the sector may be turning a corner. 

“However, longer term the sector continues to suffer from weak global demand and competition from overseas. Domestically policy uncertainty has put a hold on hiring and the additional increase to minimum wage confirmed in last week Budget as well as the salary sacrifice cap will not encourage business owners to hire more people. If anything, the benefits to being an entrepreneur in the UK are being whittled away.

“While the Chancellor stated, once again, her commitment and that of the Government to skills development, the feeling across the sector is these do little to address the critical skills shortage, which remains a key barrier to growth. And despite the initial positive reception to the announcement of the Industrial Strategy in June, no tangible measures were announced during the Budget that went to the heart of the significant challenges around the gravity of the UK’s lagging productivity and competitiveness.

“On the plus side the Chancellor announced plans to cut manufacturers’ energy costs by up to 25% from April 2027 which adds to the relief for high energy users already announced there are fears that this is too late to allay the planned investments in the infrastructure of £80m in towards net zero which will be passed onto users from 2026. More widely funding for regional mayors to target growth investments was welcomed but there was little in the way of incentives for manufacturers to grow and invest.”