The UK manufacturing sector continued on the up, with production growth at its fastest since February 2022, a closely watched survey has shown.
S&P’s purchasing managers’ index (PMI) for the manufacturing sector registered 52.1 in July, up from 50.9 in June and above flash estimates of 51.8.
The PMI has remained above the neutral 50 mark in each of the past three months, its longest sequence signalling growth since mid-2022.
Companies in the survey credited the strong growth in the sector to higher demand from new product launches, efforts to clear backlogs of work and improved intakes of new business.
Dave Atkinson, UK head of manufacturing, SME & mid-corporates at Lloyds Bank, said: “Today’s figures confirm three consecutive months of growth and will provide a welcome boost to the sector despite some of the uncertainties of late.
“July’s growth may give businesses the breathing space they need to reconsider stalled investment plans to support them to remain competitive and consider longer term growth strategies.
Four out of five of the PMI’s components signalled an improvement in overall operating conditions, with only stocks of purchases continuing its twenty-two months streak of depleting.
However, output, new orders, and employment were all up, with the first increase in workforce levels since September 2022. Alongside these, average vendor lead times also continued to lengthen, though S&P noted this was because of supply-chain constraints, rather than improving demand for inputs.
Rob Dobson, director at S&P Global Market Intelligence, added: “Hopes for an economic revival and reduced political uncertainty took confidence to one of its highest levels for two-and-a-half years, with 60 per cent of companies surveyed now forecasting output will rise over the coming 12 months.
“There were also further signs that the trend in new export business is close to stabilising following a prolonged period of decline.
“Inflationary pressures remain a blot on the copybook, however, with input costs rising to the greatest extent in one-and-a-half years.
“Selling prices are also rising at the quickest rate since mid-2023. Policymakers are likely to take a cautious approach to loosing monetary policy amid these signs that inflationary pressures may be pivoting away from services and towards manufacturing.”