UK Factory Conditions Improve in July

The S&P Global Flash UK Manufacturing PMI increased to 52.8 in July 2026 from 52.5 in June, beating forecasts of 52. Goods producers recorded an expansion of production levels for the fourth month in a row in July. The rate of growth accelerated to its strongest since September 2024, attributed to generally improving market conditions and a subsequent strengthening of new order intakes. Also, manufacturers indicated a rise in unfinished work for the first time since April 2022 and there was a marginal increase in staffing levels. At the same time, softer cost pressures were observed. Some manufacturers noted instances of lower raw material prices and oil-related surcharges (especially for plastics). Manufacturers indicated the least marked downturn in supplier performance since February, despite many firms noting longer international shipping times.

The S&P Global UK Manufacturing PMI posted 52.5 in June, down from May's four-year high of 53.9 and the earlier flash estimate of 53.1. Factory production accelerated to a 21-month high, driven by robust domestic sales and export gains from China, the US, and the EU, though growth opportunities in the Middle East stalled due to regional conflict. However, new order inflows decelerated to their weakest pace since December 2025. Employment rose modestly for a third month as rising input costs and market uncertainty forced some firms to freeze headcounts. Meanwhile, severe global shipping delays and material shortages substantially lengthened supplier delivery times and drove up input prices, prompting manufacturers to raise output charges at a pace near May's four-year high. Looking ahead, business confidence remained tepid, with 48% of firms anticipating growth from new tech and AI against broader policy concerns.

The UK Manufacturing PMI eased to 53.1 in June 2026, a three-month low and below expectations of 53.8, compared with 53.9 in May, flash data showed. Despite the decline, manufacturing output improved, with the index rising to 53.6, its highest level in 21 months, from 52.2 previously. The increase was supported by a temporary boost from customer stockpiling as businesses prepared for potential price increases. However, the slowdown in new order growth to a six-month low suggested that this demand boost may be fading. Manufacturing employment increased, although some firms said recent hiring was mainly a short-term response to stronger order books. Input price pressures eased, while higher selling prices largely reflected the pass-through of increased costs to customers. Supply chain conditions deteriorated again, with more manufacturers reporting longer delivery times than improvements, although the pace of disruption was the weakest in three months.