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The UK manufacturing sector remained in downturn in July, survey results from S&P Global showed on Friday, though the contraction eased to its least negative in six months. The manufacturing purchasing managers’ index picked up to 48.0 points in July, from 47.7 in June, though it remained below the 50-point neutral mark. The reading came in below last week’s flash estimate of 48.2 points. The rate of contraction in output slowed to its weakest in the current period of decline, while business optimism rose to a five-month high. However, S&P Global noted that there remained risks to the downside, with persistently weak domestic and overseas market conditions, subdued client sentiment and manufacturer concerns about the ‘ongoing implications of government budget decisions’. Manufacturing production contracted for the ninth month in a row. However, the rate of decline was ‘mild’, S&P Global noted, and was the weakest during the current downturn. The consumer and intermediate goods sectors returned to growth after eight and five month sequences of contraction respectively, but investment goods output fell at a quicker pace than June. The overall level of incoming new business fell for the tenth straight month and at a faster pace than the prior month. New export orders have fell for the past three and a half years. S&P Global said the latest decline was due to global tariff uncertainties, post-Brexit administrative issues, and rising competition. Despite this, business optimism approved due to hopes for a market recovery, new product launches, and operational improvements. S&P Global said optimism remained below the long-run average due to concerns over market sentiment and challenges from government policy and trade disruptions. ‘The UK manufacturing sector is starting to send some tentatively encouraging signals, with the downturn moderating in July as factory output came close to stabilising and future output expectations hit the highest since February,’ said Rob Dobson, director of S&P Global Market Intelligence. ‘However, it’s clear that there’s no assured path back to strong growth. Clients in the home market often remain unwilling to spend due to cost factors such as higher minimum wages and employer [national insurance contributions], while export markets are being buffeted by geopolitical stresses and trade and tariff uncertainties.’ Dobson said the biggest concern is the labour market, with the rate of job cutting through ‘much of 2025’ the steepest since the pandemic in 2020. ‘With the autumn budget only a few months away, manufacturers will likely remain cautious and focussed on stabilisation while waiting to see if future budget announcements provide much needed support or further challenges to overcome,’ he added. The survey features a panel of 650 manufacturers. The responses were collected between July 10 and 28. The service and composite PMI readings will be released on Tuesday next week, with the construction PMI reading to follow on Wednesday. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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