UK manufacturing experienced its strongest growth in over two years in August, with easing inflationary pressures for businesses and consumers, according to new data. The S&P Global UK manufacturing PMI survey showed a reading of 52.5, slightly up from July’s 52.1. This marks the highest reading in 26 months and aligns with analysts’ expectations. A score above 50 indicates sector growth, while anything below suggests contraction.
Rob Dobson, director at S&P Global Market Intelligence, highlighted the manufacturing sector’s continued positive contribution to the broader economy, with the investment goods sector leading the way. August marked the fourth consecutive month of growth for UK manufacturing, with factories reporting increases in output, new orders, and employment as the sector’s recovery gained momentum.
Production has consistently risen over the last four months, driven by stronger order books and efforts to fulfil previously agreed contracts. The improvement in new business was attributed to a more optimistic market sentiment following a reduction in interest rates. However, this growth was primarily led by the domestic market, as export orders fell for the 31st month in a row due to weak demand in Europe and a slowdown in China. Dobson pointed out that the decline in export orders remains a significant concern, with overseas business having steadily dropped since early 2022.
On the employment front, job creation accelerated, reaching its highest level in over two years, reflecting the sector’s higher output and increased order volumes. Although input costs rose, the rate of increase slowed, and selling price hikes also eased during the month.
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