Economic Buzz: UK manufacturing growth moderates as demand loses momentum

The UK manufacturing sector remained in expansion, although growth showed signs of moderating as demand softened despite stronger production.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers? Index (PMI) eased to 52.5 from 53.9, remaining above the 50.0 growth threshold. Output strengthened to a 21-month high, supported by higher production and customer stockpiling, while new orders continued to expand at a slower pace.

Export demand also remained positive but grew at its weakest pace during the current expansion. Stronger demand from mainland China, the European Union and the United States was partly offset by weaker opportunities in the Middle East due to the ongoing conflict.

Business confidence remained cautious. While 48% of manufacturers expected output to increase over the next year, 44% anticipated stable conditions and 9% expected a decline. Companies cited new market opportunities, product launches, artificial intelligence, data centres and market stabilisation as key growth drivers, while concerns over government policy, geopolitical tensions and rising costs continued to weigh on sentiment.

Employment continued to increase, although hiring remained modest as firms balanced higher production with cost controls. Input price inflation eased to its weakest level since March, but remained elevated. Manufacturers also continued to raise selling prices, with output price inflation staying close to a near four-year high, while supply chain disruptions and longer supplier delivery times persisted.

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