Surprise jump in manufacturing confidence but ‘growth incentives still limited’, says MHA

A surprise rise in a key manufacturing confidence index could be sign that the sector has turned a corner, according to a leading advisor to the sector based in the North West.

Ginni Cooper, partner in the manufacturing team at Lancashire-based accountancy and advisory firm MHA, welcomed the latest data from S&P’s UK Manufacturing Purchasing Manager’s Index (PMI) for November.

However, she warned that a lack of growth and investment incentives for manufacturers in last week’s Budget, could continue to put the sector at risk of stagnation.

Ginni, who advises manufacturing and engineering businesses across the region, said: “The rise in manufacturing PMI to above 50, for the first time since September 2024, has certainly come as a welcome surprise, suggesting that there are tentative signs the sector may be turning a corner.

“However, longer term the sector continues to suffer from weak global demand and competition from overseas. Domestically, policy uncertainty has put a hold on hiring and the additional increase to minimum wage confirmed in last week Budget, as well as the salary sacrifice cap will not encourage business owners to hire more people. If anything, the benefits to being an entrepreneur in the UK are being whittled away.

"While the Chancellor stated, once again, her commitment and that of the Government to skills development, the feeling across the sector is these do little to address the critical skills shortage, which remains a key barrier to growth.

“And despite the initial positive reception to the announcement of the Industrial Strategy in June, no tangible measures were announced during the Budget that went to the heart of the significant challenges around the gravity of the UK's lagging productivity and competitiveness.”

Ginni added: “On the plus side, the Chancellor announced plans to cut manufacturers’ energy costs by up to 25 per cent from April 2027 which adds to the relief for high energy users already announced.

"There are fears this is too late to allay the planned investments in the infrastructure of £80m towards net zero which will be passed onto users from 2026. More widely funding for regional mayors to target growth investments was welcomed but there was little in the way of incentives for manufacturers to grow and invest.”