UK manufacturing downturn eases in July

Activity in the UK manufacturing sector improved in July, although it remained in contractionary territory, according to a survey released on Friday.

The S&P Global manufacturing purchasing managers’ index rose to a six-month high of 48.0 from 47.7 in June. However, it was below the flash estimate of 48.2 and remained below the 50 mark that separates contraction from expansion for the tenth month.

Four out of the five PMI components - output, new orders, employment and stocks of purchases - remained at levels consistent with a deterioration in overall operating performance.

Rob Dobson, director at S&P Global Market Intelligence, said: "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.

"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 NICs, while export markets are being buffeted by geopolitical stresses and trade and tariff uncertainties.

"The biggest concern remains the labour market, with the rate of job cutting through much of 2025 among the steepest since the pandemic year of 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."