"The final manufacturing PMI for December on the back of an increase in November confirmed that at long last the UK manufacturing sector can look forward to 2026 with modest, albeit patchy, confidence. Although the financial pressures remain namely on rising wage bills and fuel costs this has finally been outweighed by a significant uptick in demand particularly from the UK."
"It's not all sweetness and light though with our clients reporting expecting little or new hiring in the sector in 2026 and instead looking to find ways to work more efficiently, often by automating or improving their processes. Government measures, such as the confirmed increase to the minimum wage, alongside the impact of the salary sacrifice cap, are making businesses cautious about hiring new staff."
"Where the government could help in 2026 is by focusing their energy on clear political support for an Industrial Strategy, given the sector needs support to tackle issues like skills, productivity, and competitiveness, and to encourage growth and investment for the future. The need to maintain that improvement in UK demand is vital for manufacturing's prospects in 2026 given the path ahead for global trade is not expected to get any easier."
The final manufacturing PMI for December, building on November's increase, indicates modest but patchy confidence for UK manufacturing entering 2026. Rising wage bills and fuel costs continue to exert financial pressure, but a significant uptick in demand, particularly from the UK, has outweighed those pressures. Firms expect little or no new hiring in 2026 and plan to pursue efficiency gains through automation and process improvements. Government measures like a higher minimum wage and the salary sacrifice cap are discouraging new recruitment. Clear political support for an Industrial Strategy would help address skills, productivity, competitiveness, and encourage investment. Geopolitical trade challenges and tariffs will prompt near-shoring and reshoring.
Read at London Business News | Londonlovesbusiness.com
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