UK PMI hits 14-month low with steepest job losses since 2020
3 March 2025 
The UK manufacturing sector continued to face tough operating conditions in February, as worries about weak demand and rising cost pressures led to deeper downturns in output, new orders and employment.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to a 14-month low of 46.9 in February, down from 48.3 in January. The UK’s PMI has remained below 50.0 – indicating contraction – for five months in a row. Output fell for the fourth month running in February, as manufacturers scaled back production in response to falling new orders, low customer confidence and supply chain issues. Companies faced weaker demand from both domestic and overseas customers.
Despite this, business optimism in the manufacturing sector rose to a six-month high in February. This is being attributed to investment spending, marketing initiatives, new products and projects, planned diversifications and hopes that economic conditions would strengthen.
The UK domestic market was downbeat in February due to a combination of rising cost pressures, an unwillingness to spend, and the impact of policy changes announced in last year’s Autumn Budget. New export business fell at its quickest pace for a year, with reports of drops in new orders from Europe (in particular, Germany), the Middle East, Brazil and the US.
The manufacturing sector also recorded the steepest falls in employment since May 2020. Staffing levels have dropped in five of the past six months. The latest job losses reflected weak demand, cost control initiatives and restructuring in response to changes in both the minimum wage and employer National Insurance contributions (NICs). Companies laid off temporary staff, reduced the hours of some employees, implemented redundancies, and did not replace some leavers and retirees.
February saw supply chains remain under stress despite weaker demand for inputs. Shipping delays, vendor capacity issues, port disruption, customs delays and an increasing number of items being on back order, were all cited as reasons for longer lead times.
“February PMI data show UK manufacturers facing an increasingly difficult trading environment,” says S&P Global Market Intelligence director, Rob Dobson. “Weak demand, low client confidence and rising cost pressures are accelerating the downturns in output and new orders, while the Autumn Budget’s changes to the national minimum wage and employer NICs are driving up inflation fears and intensifying the downward trend in staff headcounts. The pace of manufacturing job losses is currently running at a rate not seen since the pandemic months of mid-2020.
“Cost and demand considerations also encouraged cutbacks to purchasing activity and stocks, as the tough economic backdrop placed manufacturers on an increasingly defensive footing,” he adds. “Input costs are rising at the fastest pace for over two years, as suppliers front-load expected increases in their own wage and NIC costs. Factory gate selling price inflation has also hit a 22-month high. This combination of absent growth and rising prices will contribute to a growing dilemma for the Bank of England over the coming months.”
Commenting on the PMI data, Make UK senior economist, Fhaheen Khan, says: “The pressure is on for manufacturers who are dealing with deteriorating economic conditions in real time due to incoming higher taxes, energy bills and global trade uncertainty. But the leading cause of anxiety for firms will be the choices they have to make to keep their businesses afloat, as the wrong ones could domino into new disasters in the future. Whether it comes from increasing prices, reducing investment, or cutting back on staff, the evidence suggests businesses are leaving no stones unturned to secure themselves.
“This behaviour unfortunately raises the prospect that the UK’s economic growth rate will fall even further from its promised trajectory of outperforming G7 nations,” Khan adds. “Now, as the Government prepares to unveil its long-term strategies to get the nation back on track, all eyes will be on the details of the Invest 2035 plan which will be a critical moment for resetting business conditions.”
- Manufacturing PMIs in the Eurozone showed some signs of recovery with Germany hitting a 25-month high of 46.5 (still in contraction territory), France achieving a nine-month high of 45.8, Italy recording a five-month high of 47.4, and the Netherlands hitting an eight-month high of 50.0. The only Eurozone member to record an expanding manufacturing sector was Ireland on 51.9 (a 12-month high). But Spain dropped into negative territory with a PMI of 49.7 – a 13-month lowSP
