Jaguar Land Rover restart helps UK factories return to growth | Manufacturing sector

UK factories rebounded in October following the reopening of Jaguar Land Rover operations and a rise in consumer spending, according to a closely watched survey of the manufacturing sector.

The S&P Global purchasing managers’ index (PMI) rose to its highest level in a year as business optimism rose and factory production increased.

Britain’s biggest carmaker, Jaguar Land Rover, has supported the recovery after it began reopening facilities hit by a cyber attack that some experts estimate has cost the UK economy around £1.9 billion.

Manufacturers have been able to eliminate some of the uncertainty caused by Donald Trump’s tariffs. Consumers also increased spending on new cars, improving the outlook for manufacturers of vital industrial components.

S&P Global said that PMI increased from 46.2 in September to 49.7 in October, and that a figure above 50 indicates expansion. A subindex measuring factory output rose sharply to 51.6 from 45.7 in September, signaling a return to growth.

Martin Beck, chief economist at the consultancy WPI Strategy, said there were reasons to be optimistic that the recovery would accelerate.

“Rising real wages should support domestic demand for goods, while government incentives for green technologies and battery production could boost investment,” he added.

“The recent depreciation of sterling against the dollar and euro also increases the UK’s export competitiveness. In addition, the government’s decision to increase the discount on electricity grid charges for energy-intensive industries provides some relief in costs.”

But Mike Thornton, head of industry at accountants RSM UK, said: “While the increase in manufacturing activity in October marked a reversal of the downward trend seen in August and September, only time will tell whether this is a temporary rebound in production rather than a permanent recovery.

“Following Jaguar Land Rover’s phased resumption of production in October, this is likely to have a ripple effect throughout the supply chain, particularly as the closure affects more than 5,000 mid-sized businesses.”

The UK’s manufacturing sector has suffered repeated blows since the Covid outbreak. Industry bodies complained that rising wages and higher employment taxes, as well as a sharp rise in gas and electricity costs, were disrupting many businesses.

The British Chamber of Commerce, CBI and manufacturing lobby group Make UK have called on the chancellor to give extra support to the manufacturing sector in the budget later this month.

Rob Dobson, director at S&P Global Market Intelligence, said: “There are concerns that the next budget will worsen the persistent challenges created by last year’s budget, particularly in relation to the impact of the national minimum wage and employer national insurance on costs, demand and output.

“This means business optimism remains below the long-term average, despite rising to an eight-month high in October.

“Manufacturers appear to be stuck in a fixed pattern until the domestic politics and geopolitical background emerge more clearly.”