UK factories have seen the biggest drop in export orders since the start of the pandemic, with demand from the US, Europe and China waning amid global uncertainty over Donald Trump’s tariffs, a new survey shows.
Manufacturing production has been shrinking for seven months in a row.
The S&P Global UK manufacturing PMI survey, watched closely by economists, showed a reading of 45.4 in April, up from 44.9 in March.
Any reading above 50.0 indicates that activity is growing while any score below means it is contracting.
April’s reading was a slight improvement on March’s 17-month low, and also higher than an earlier estimate of 44.0.
However, the survey revealed that confidence among manufacturing businesses slumped as they grappled with a worsening economic outlook and mounting cost pressures.
Overseas demand for UK-made goods slipped with the rate of new export orders sinking to the lowest level since May 2020, when orders dried up during the onset of the Covid pandemic.
Rob Dobson, director at S&P Global Market Intelligence, said: “Surveyed manufacturers noted that US tariff announcements were having a noticeable impact on global markets as trading partners adapt to increased trade volatility.”
Earlier this month, US President Donald Trump introduced sweeping new levies on US imports, at varying rates for different countries and industries.
This included a 25% charge on aluminium and steel, cars and car parts, raising concerns among manufacturers who trade regularly with the US.
UK factories had already been experiencing a downturn as rising costs and tax increases squeezed output, even before tariff uncertainty bloomed.
The latest PMI survey showed optimism among manufacturing firms fell to a more than two year low, with less than half of those surveyed expecting output to rise over the coming year.
Hiring also continued to decline, with job losses happening at the second-fastest rate in nearly five years.
Companies have been making cutbacks on staff in order to offset the impact of rising national insurance contributions and increased minimum wages, according to the survey.
Mr Dobson said: “The start of the second quarter saw UK manufacturing buffeted by adverse global market conditions, rising cost pressures, deteriorating supply chains and increased trade uncertainty.”
Fhaheen Khan, senior economist at Make UK, said: “While actual changes in trade have been limited, the unpredictability, particularly around US tariff policy, is doing significant damage and paralysing decision makers.
“Many firms are delaying major investment decisions until greater clarity emerges, whilst being forced in the meantime to cut costs through redundancies while pushing through price increases.”