UK manufacturing PMI October 2026. How can manufacturers fund rising costs?

UK factories grew faster in October, but they are paying more for almost everything they buy. The S&P Global UK Manufacturing PMI published on 2 November 2026 rose to 52.8, a five-month high, while input costs went up for the 34th month in a row. Here is what the survey shows, why costs keep climbing, and how manufacturers can fund higher prices, longer lead times and new equipment without running short of cash. Smart Funding Solutions is a broker, not a lender. We compare whole of market options and arrange business finance from £10,000 to £20 million.

01What did the October 2026 manufacturing PMI show?

The headline index rose to 52.8 in October from 51.9 in September, the same as the early flash estimate. Any reading above 50 means conditions are improving, so this was the strongest month for UK manufacturing since May. The survey was collected between 12 and 27 October, before the Budget on 28 October.

• Output. Up for a seventh month running, and at the fastest pace in 25 months. Investment goods makers did best.
• New orders. Growth was the quickest since July, with better demand at home and abroad.
• Exports. New export business rose for a tenth month, with orders from mainland China, the EU, Brazil, the Middle East and the US.
• Jobs. Staff numbers were unchanged, which ended six months of hiring.
• Confidence. Optimism rose to an eight-month high, with firms pointing to expansion plans, spending on capital equipment, AI and data centre work and new products.

For the previous month, read our report on the September 2026 manufacturing PMI, and for the wider picture see whether the UK is in recession.

02Why are manufacturing costs still rising?

Input prices rose for the 34th month in a row, and the rate of increase was one of the sharpest in four years, beaten only by March to June 2026. Firms reported higher prices for energy, fuel, transport, electronics, chemicals and metals. The survey links much of it to supply chain disruption, with shipping re-routed, ports congested, materials short and conflict disrupting key transport routes.

Rob Dobson, Director at S&P Global Market Intelligence, said "manufacturers are being buffeted by rising fuel, energy and transportation costs as supply chain shocks and delays continued to drive up inflationary pressures."

Wages are the next pressure. The government confirmed on 28 October that the National Living Wage for workers aged 21 and over rises to £13.21 an hour from April 2027, up 3.9%. The October survey already showed firms holding back on hiring because of possible policy changes. Our Budget 2026 summary covers the other measures that affect manufacturers.

03Are manufacturers passing higher costs on to customers?

Partly. Output prices rose at the fastest pace in three months, as firms passed on some of the increase. But most manufacturers work to quotes and contracts agreed weeks or months ahead, so a jump in material or energy costs often lands before the price rise does. That gap between paying suppliers and getting paid by customers is where cash flow gets tight, even in a business with a full order book.

Longer supplier lead times add to the strain. Delivery times lengthened to one of the greatest extents in four years, and some firms told the survey that long lead times were becoming the norm. When parts take longer to arrive, firms buy earlier and hold more stock, which ties up more cash for longer.

Input prices rose for the 34th month in a row, and the rate of increase was one of the sharpest in four years, beaten only by March to June 2026.

04What does this mean for interest rates and business loans?

The Bank of England announces its next decision on Thursday 5 November, according to its 2026 meeting dates. Consumer price inflation was 3.5% in September according to the ONS, well above the 2% target, and S&P Global said the October cost data "will further shorten the odds of interest rate hikes to come from the Bank of England."

A rise from 3.75% to 4% would add about £250 a year for every £100,000 of variable-rate borrowing that tracks Bank Rate. Fixed-rate loans and most hire purchase agreements already signed would not change. Our post on what a rise to 4% means for business loans sets out which facilities move, and the September inflation report explains why rates are expected to go up.

05How can a manufacturer fund rising costs?

The right answer depends on where the cash is tied up. These are the options manufacturers use most when costs run ahead of income.

• Invoice finance. Invoice finance releases most of the value of unpaid invoices as soon as you raise them, so you are not waiting 30 to 90 days to pay suppliers. Invoice discounting keeps it confidential, and export invoice finance covers overseas customers.
• Funding for materials and orders. Purchase order finance pays suppliers for a confirmed order, stock finance funds raw materials you need to hold, and trade finance helps with imported components.
• Working capital. Working capital loans cover a gap of a few months, while a revolving credit facility lets you draw and repay as costs move.
• Larger facilities. Asset-based lending combines debtors, stock and machinery in one facility, which suits manufacturers with a lot of value on the balance sheet.

The invoice finance calculator shows roughly how much your sales ledger could release.

06Should manufacturers still invest in machinery?

Many are planning to. The October survey showed confidence at an eight-month high, with capital equipment spending among the reasons. New machinery that saves energy, labour or waste can offset part of the rise in running costs, and spreading the cost keeps cash in the business for materials and wages.

• Plant and machinery finance spreads the cost of new or used equipment over its working life, with the machine as security.
• Asset refinancing releases cash from machinery you already own outright.
• Renewable energy finance funds solar panels, battery storage and other kit that cuts energy bills.
• Growth Guarantee Scheme loans can help where security is limited.

Read about asset finance and capital allowances for the tax side, see CNC machine finance for one common example, and run the numbers with the asset finance calculator.

07Which manufacturers can get finance?

Lenders fund most kinds of manufacturing, from small workshops to firms with turnover in the tens of millions. Our sector pages explain what lenders look for in each.

• Manufacturing finance
• Engineering business finance
• Food manufacturing finance
• Electrical manufacturing finance
• Joinery and furniture manufacturing finance
• Packaging business finance

08What does the October PMI mean for your funding?

Demand is there, but rising costs, longer lead times and higher wages next April all pull cash out of a manufacturing business before the revenue comes back in. Lenders are still keen to fund manufacturers with a full order book. The best time to arrange a facility is before the squeeze, not in the middle of it, and a variable rate facility arranged now could cost a little more after 5 November.

Check how much your business could borrow with our borrowing guide, then get your Instant Quotes to see your lender matches instantly, with no credit check. A broker then searches the wider market for you. Read how Instant Quotes work if you are new to it. Lenders make every decision, and all finance is subject to status.