British factory output contracted at the fastest rate in 11 months in December, amid a swathe of job losses, growing concerns about rising business taxes and a worsening global economy.
The S&P Global UK manufacturing PMI survey, watched closely by economists, recorded a reading of 47.0 in December, from 48.0 in November.
Any reading above 50 indicates activity is growing while any score below means it is contracting.
The rate of job cuts hit a 10-month high, the survey found, with firms saying weak market conditions caused many to reduce their headcounts.
Manufacturers said they were concerned about future cost increases, partly driven by rising taxes announced by Chancellor Rachel Reeves last year.
Companies will pay more in national insurance contributions (NICs) from April, while the minimum wage is also set to rise, which will make it more expensive to employ people.
Firms also cited a weakening global economic outlook, as exports fell due to lower demand in Europe, Asia and the UK.
Concerns remain about the outlook for global trade in 2025, with Donald Trump assuming the US presidency later this month having promised a slew of trade tariffs.
Rob Dobson, director at S&P Global Market Intelligence, said: “A stalling domestic economy, weak export sales and concerns about future cost increases led to the steepest contraction of UK manufacturing production for almost a year in December."
