01.07.202412:52:00UTC+00UK Manufacturing Activity Expands Further Despite Inflationary Pressures

The UK manufacturing sector experienced continued growth in June, marked by increases in output and new orders for the second consecutive month, revealed S&P Global's final survey data on Monday.

The manufacturing Purchasing Managers' Index (PMI) saw a slight dip to 50.9 in June, down from 51.2 in May. However, any reading above 50 indicates growth, with the flash reading previously standing at 51.4.

June saw an incremental rise in production volume, driven by fresh influxes of new orders and efforts to clear existing work backlogs. Output increases were notably present across consumer, intermediate, and investment goods categories.

New orders also exhibited robust growth in June, attributed to improved demand, heightened market activity, product promotions, and the cessation of destocking by some clients. The demand surge mainly benefited producers of consumer and investment goods.

Conversely, foreign demand remained weak, with new export orders declining for the twenty-ninth consecutive month due to reduced intake from clients in North America, China, Germany, France, Italy, Sweden, the Middle East, and Poland. The fall was further exacerbated by shipping delays and rising freight costs amidst the Red Sea crisis.

Despite challenges, British manufacturers were optimistic in June, anticipating market recovery, growth strategies, new product launches, and promotional activities. However, some expressed uncertainty due to the upcoming general election, with hopes for stabilization post-election.

On the pricing front, input costs rose at the fastest rate since January of the previous year, driven by increased charges for energy, food, metals, packaging, paper, plastics, and timber. This surge led to a continued decline in selling prices for eight consecutive months.

"This renewed upward shift in manufacturing prices will likely heighten concerns about persistent inflationary pressures among the hawkish policymakers at the Bank of England," said Rob Dobson, Director at S&P Global Market Intelligence.