UK factories returned to growth in October, driven by the reopening of Jaguar Land Rover operations and a pick-up in consumer spending, according to the 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 to 51.6 from 45.7, signalling expansion.
Jaguar Land Rover, Britain's largest carmaker, began reopening facilities hit by a cyber-attack that some experts estimated cost the UK economy around £1.9bn. The restart supported the broader manufacturing recovery, creating a ripple effect through the supply chain, which had impacted more than 5,000 middle-market businesses during the shutdown.
Consumer spending on new cars also improved, boosting demand for industrial components. Martin Beck, chief economist at WPI Strategy, pointed to rising real wages, government incentives for green technologies, and the depreciation of sterling as factors underpinning optimism. However, Mike Thornton of RSM UK cautioned that it remains unclear whether the rebound is temporary or the start of a sustained recovery.
The manufacturing sector has faced numerous challenges since the pandemic, including high energy costs, rising wages, and increased employment taxes. Industry bodies such as the British Chambers of Commerce and Make UK have called on 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 concerns about the budget's impact on costs and demand. He described manufacturers as being in a holding pattern until domestic policy and geopolitical conditions become clearer.
