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

Manufacturing PMI has fallen back to 47 and it remains firmly in contraction territory below 50. This isn’t surprising, given the scale of the challenges UK manufacturers are currently facing despite some modest signs of optimism over the summer.

Just as manufacturers thought the threat of tariffs had eased, last week’s announcement of new U.S. tariffs on more than 400 categories of British goods delivered another blow to the struggling sector. Finding growth has now become an even bigger challenge as costs continue to rise and exporting goods becomes more difficult.

On top of that, there are concerns that the upcoming Autumn Budget will further hit the sector, which is still reeling from the April increases to employers’ National Insurance contributions and the minimum wage as was highlighted in our manufacturing report. While these costs are now baked into cashflow forecasts, our clients are telling us it is still putting the brakes on substantive, long term investment.

Manufacturers are hoping (perhaps naively) that the government will provide more support in this October’s budget through incentives like expanded R&D tax credits, capital allowances, and a more competitive corporation tax rate. What they simply can’t afford are any more tax hikes.