UK factories returned to growth in October, buoyed by the reopening of Jaguar Land Rover operations and a pick-up in consumer spending, according to the latest S&P Global purchasing managers' index (PMI). The PMI rose to a one-year high of 49.7, up from 46.2 in September, with a sub-index measuring factory output jumping sharply to 51.6, signalling expansion.
Jaguar Land Rover, Britain's largest carmaker, began reopening facilities after a cyber-attack that some experts estimated cost the UK economy around £1.9bn. The restart created a ripple effect throughout the supply chain, particularly impacting more than 5,000 middle-market businesses that had been affected by the shutdown.
Consumers increased spending on new cars, improving the outlook for manufacturers of vital industrial components. Martin Beck, chief economist at WPI Strategy, cited rising real wages and government incentives for green technologies as reasons for optimism, while noting that the recent depreciation of sterling could boost export competitiveness.
However, Mike Thornton of RSM UK cautioned that it remains unclear whether the uptick is a temporary rebound or a sustained recovery. Manufacturers continue to face challenges from high energy costs, rising wages, and employment taxes, with industry bodies urging the chancellor to provide additional support in the upcoming budget.
Rob Dobson of S&P Global Market Intelligence noted that business optimism, while at an eight-month high, remains below its long-run average due to uncertainty over domestic policy and geopolitical factors. Manufacturers appear to be in a holding pattern until greater clarity emerges.
