Activity in the UK’s manufacturing sector expanded at its fastest pace for more than two years last month, a closely-watched survey has suggested, adding to positive signs for economic growth.
The S&P Global UK manufacturing PMI survey came in at 52.5 for August, up from 52.1 in the previous month and unchanged from the earlier “flash” estimate.
The reading was the highest for 26 months and fell in line with analysts’ expectations.
S&P’s survey, which measures economic activity in the private sector, is closely watched for signals about the performance of the economy. Anything above 50 indicates that the economy is growing, while a score below that suggests contraction.
The PMI has now signalled expansion in five out of the past six months, with the exception being April. Output, new orders and employment all continued to grow last month.
“The upturn is broad-based across manufacturing, with the investment goods sector the stand-out performer,” said Rob Dobson, director at S&P Global Market Intelligence.
The UK economy has staged a strong rebound from a shallow recession last year, growing 0.6 per cent in the second quarter. The UK was also the fastest-growing economy in the G7 in the first three months of 2024.
Monday’s figures showed manufacturing production rose for its fourth straight month as companies raised output in response to higher new order intakes and efforts to clear previously-agreed contracts.
In a sign that price pressures are easing for firms and customers, input cost and selling price inflation slowed in August. Input prices rose for an eighth month in a row due to supply constraints and higher shipping costs.
Demand at home helped to offset a fall in new export orders for the 31st month in a row.
“The upturn continues to be driven by the domestic market, which is helping to compensate for lost export orders,” Dobson said.
He pinned the continuous fall in new business from overseas since early 2022 on weakness in Europe, a slowdown in mainland China, high shipping costs and global uncertainty.
Services PMI is due on Wednesday. A preliminary reading for August hit its highest level since April at 53.3, up from 52.5 in July.