Final data published by S&P Global/CIPS showed that business activity in the UK manufacturing sector increased sharply in July, exceeding the preliminary estimate and forecasts of economists, with growth of output and new orders also strengthening, leading to the first increase in workforce levels since September 2022.
UK manufacturing PMI rose to 52.1 points from 50.9 points in June. A value above 50 points indicates an expansion of activity in the sector. Economists had expected an increase to 51.8 points.
The report also showed that four out of the five PMI components were at levels signaling an improvement in overall operating conditions. Manufacturing production grew again in July, while the growth rate was the strongest in almost 2.5 years. Companies linked output growth to new product launches, efforts to clear backlogs of work and improved intakes of new business. New orders continued to rise in July (for the third month in a row) and recorded the strongest growth since February 2022. Meanwhile, new export orders declined again, but the latest reduction was the weakest since the current sequence of contracts started in February 2022. The data also showed that manufacturers' optimism about the prospects for activity intensified in July, reaching the second highest level in almost 2.5 years. Three out of five companies said they forecast production growth over the coming year, well above the 4% expected contracts. Meanwhile, employment in the manufacturing sector increased for the first time since September 2022. This allowed companies to meet the needs of both new and existing contracts, meaning backlogs of work were reduced further. Input price inflationary pressures continued to build during July, while the rate of increase in costs accelerated to a 1.5-year high.