UK Manufacturing Rebounds as Inflation Surprises Lower and Confidence Builds

NatWest’s Staying the Course (27 Oct 2025) highlights steady progress in the UK economy amid fiscal and global uncertainty.

• Manufacturing momentum returned, with output climbing to a 13-month high (PMI 51.1), driven by a rebound in automotive production. Employment losses are easing, and input cost pressures continue to fade.

• Inflation held steady at 3.8%, below expectations, with falling food prices offering relief to households. Markets now anticipate further BoE rate cuts as underlying price pressures cool.

• Consumer confidence improved to a two-year high, supported by robust retail sales (+0.9% QoQ), while housing activity remains regionally uneven ahead of the November Budget.

Can the UK maintain its “slow but steady” recovery path as fiscal challenges loom? The full report explores NatWest’s latest economic signals and policy outlook.