June recorded a slight dip in UK manufacturing growth, but the sector held firm despite rising cost pressures, and is still enjoying its strongest growth in two years.
Output and new orders both expanded for a second successive month, and rates of expansion remained close to May’s highs.
The S&P Global UK Manufacturing Purchasing Managers Index (PMI), which is seasonally adjusted, recorded 50.9 in June, a slight decrease on 51.2 in May and a drop in the earlier flash estimate, which was marked at 51.4.
In both May and June, the PMI posted higher than the neutral 50.0 mark – an indicator of expansion.
New order growth rose for the third time in four months and is attributed to increased levels of market activity. It is worth noting that new business is primarily being sustained by the domestic market, as overseas orders in Europe, North America and the Middle East declined for the 29th month in a row. This was exacerbated by the Red Sea Crisis, along with related shipping delays and the rise of freight costs.
The data reveals a mixed picture when broken down by company size. Output growth was restricted to large-scale producers, with many SMEs (small and medium-sized enterprises) reporting contractions and a fall in orders.
Despite lingering uncertainty over the Election, manufacturers nevertheless remained optimistic in June, confident in a continuing market recovery bolstered by growth strategies, product launches and other promotional activities. Around 57% of firms expected output to rise over the coming year.
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