Manufacturing confidence lifts as experts urge caution on growth plans

Michael Gould, founder of business planning platform Kaleidoscope.com

UK factories are showing fresh signs of recovery, with manufacturing activity picking up and business confidence improving after months of pressure across the sector.

Recent PMI data has reached its highest level in months, with output and export orders strengthening, according to figures reported this week by The Guardian.

The rebound has provided a welcome boost to sentiment, but experts are warning firms not to mistake positive indicators for long-term stability.

Michael Gould, founder of business planning platform Kaleidoscope.com, said headline figures can create a false sense of security if businesses fail to plan beyond the immediate upswing.

“Economic indicators are useful signals, but they are not a business plan,” he said.

“A single positive PMI reading doesn’t mean the planning deficit in UK SMEs has disappeared.”

While confidence is improving, many of the pressures of recent years remain firmly in place. Inflation is still running at around 3.4%, wage expectations continue to rise, and businesses are managing higher energy, logistics and financing costs alongside fragile margins.

“This is exactly the moment when planning discipline is most at risk,” Gould said.

“When sentiment turns positive, businesses often feel pressure to move quickly, to hire, to invest, to commit, without fully testing whether those decisions still hold up if conditions shift again.”

He warned that many SMEs continue to rely on static annual budgets that struggle to cope with volatility and sudden cost changes.

“Traditional budgeting assumes a relatively predictable environment,” Gould said.

“That assumption hasn’t held true for a long time.”

Rather than reacting immediately to improved sentiment, Gould said businesses should focus on making decisions that remain viable under different scenarios.

“Growth should be treated as a possibility, not a promise,” he said.

“The question leaders need to ask isn’t ‘what if this continues?’, but ‘what if it doesn’t?’”

He added that hiring and investment decisions must be aligned closely with cash flow and margin resilience, even when demand signals appear strong.

“Confidence doesn’t automatically equal capacity,” Gould said.

“You can have strong demand signals and still overstretch if costs rise faster than expected.”

Gould also highlighted the importance of leadership teams sharing a consistent understanding of the data during periods of change.

“Different teams often interpret the same data in different ways,” he said.

“If those assumptions aren’t aligned, businesses can find themselves making inconsistent decisions just as they scale up.”

Looking ahead, he said the next phase for manufacturers should be about strengthening decision-making foundations rather than chasing momentum alone.

“Recovery is welcome, but it’s not certain,” Gould said.

“The strongest businesses coming out of this period won’t be the ones that reacted fastest to good news. They’ll be the ones that paused, tested their assumptions, and built plans that still worked when conditions inevitably changed again.”