The UK manufacturing sector defied global turmoil by posting its fastest output growth rate since last year's mid-point, despite the ongoing Iran war and attendant stockpiling frenzy. According to S&P Global's research, June saw a 52.5 Purchasing Managers' Index (PMI) score, a marginal dip from May's four-year high of 53.1, yet still an indication of robust expansion.
The acceleration in output growth was primarily driven by firms rushing to stockpile goods and mitigate the impact of anticipated further trade turmoil in the Middle East. While new orders saw a slower pace of increase, the consumer and intermediate goods industries notably contributed to the rise in production levels.
However, S&P Global's director, Rob Dobson, cautioned that this momentum is likely to diminish in the latter half of the year as stockpiling activities inevitably slow down. A decrease in the rate of new work intakes already suggests this boost may be fading. The data also revealed positive trends in exports, which increased for the sixth consecutive month despite global tensions.
Manufacturers' optimism for the year ahead remains subdued, with many expressing concerns over ongoing geopolitical tensions and uncertainty surrounding future government policy. This sentiment underscores the critical need for a clear industrial strategy from the incoming UK government.
The S&P Global data highlighted the challenges faced by manufacturers in terms of energy prices, which remain high despite efforts to reduce costs. Stephen Phipson, CEO of Make UK, an organisation representing various manufacturing sectors, emphasised the urgency of addressing this issue as a core focus for the next Prime Minister. Cara Haffey, industrials chief at PwC UK, echoed this sentiment, stressing that a change in industrial strategy and energy policy is a key focus for businesses seeking to restore competitiveness and unlock investment across UK industry.