The UK manufacturing sector showed a tentative shift towards recovery in November, with the PMI rising to 50.2, its first move into expansion territory in over a year. Output increased for a second month, supported mainly by stronger domestic demand and a stabilisation in new orders after more than a year of contraction. Export conditions remained challenging, though the downturn in foreign orders eased to its slowest pace in twelve months. Growth, however, was uneven: investment goods producers and large firms drove the improvement, while consumer and intermediate goods manufacturers, alongside many SMEs, continued to contract.

Employment continued to fall for the thirteenth month, reflecting cost pressures, recruitment freezes and lingering uncertainty ahead of the Budget. Supply chains also remained under strain, with vendor performance deteriorating due to material shortages, transport disruptions and customs delays. Notably, factory gate prices fell for the first time in over two years as firms offered discounts to stimulate demand, while input cost inflation continued to soften.

Despite these mixed signals, business optimism improved markedly, supported by expectations of market stabilisation, new product launches, planned expansions and growing investment in technologies such as AI and data infrastructure. This latest update takes the RPI to minus 36 and the RPI-P to minus 55, meaning that economic activities continue to fall behind the expectations in the UK.

No revision expected from the November flash at 50.2 and versus from 49.7 in the October final.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 3,000 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The survey covers more than 600 industrial companies and is compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the and S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.