UK manufacturing PMI hits 26-month high in August

The PMI has now signaled expansion in five of the past six months above the neutral 50-point threshold, except for April.

Four of the PMI components held at levels consistent with an improvement in operating performance in August – manufacturing, new orders, employment and supplier lead times. In contrast, the purchase inventories component reported a contraction for the 23rd consecutive month.

The domestic market remained the main driver of new contract gains as new export orders fell for the thirty-first consecutive year, S&P noted. Companies linked the lower intake of new work from overseas clients to weaker demand in Europe, a slowdown in mainland China, shipping delays, competitiveness issues caused by high shipping costs, global conflicts and political uncertainty.

S&P Global Market Intelligence director Rob Dobson said “growth continues to be driven by the domestic market, which helps offset lost export orders.”

But he warned that the trend in export orders was a “key cause for concern”, with new business from abroad falling steadily since the start of 2022.

Looking ahead, the outlook for the manufacturing sector remains positive, with 61% of companies surveyed forecasting output to be higher a year from now, compared to just 6% anticipating a decline.

This positive sentiment was linked to new customer wins, product launches, efforts to open new markets, promotional activity and hopes for an economic recovery.

The S&P Global UK Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of approximately 650 manufacturers.

By Jeremy Cutler, Alliance News reporter