Figure 2 shows the UK manufacturing sector continued to show signs of recovery at the start of the third quarter, with stronger growth in production, new orders and export demand, alongside easing pressures from high cost inflation and supply chain disruption. The S&P Global UK Manufacturing PMI remained in expansion territory for the ninth consecutive month, registering 51.9 in July, down slightly from 52.5 in June and representing a four-month low, but still above the neutral 50.0 threshold. Four of the five PMI components indicated improving operating conditions, with output, new orders and employment all increasing, while supplier delivery times lengthened. The modest decline in the headline PMI reflected a sharp reduction in stocks of purchases, slower job creation and a significant easing in the rate of supplier delivery delays. Manufacturing output rose for the fourth successive month and accelerated to its strongest rate in almost two years, driven by growth across consumer, intermediate and investment goods production. However, performance varied by business size, as medium and large manufacturers reported output growth while smaller firms experienced a slight decline in production volumes.
Figure 2: S&P Global/CIPS UK Manufacturing PMI
UK construction firms continued to face challenging conditions in June, with sharp declines in both output and new orders, although the pace of contraction eased slightly from the six-year lows recorded in May. The S&P Global UK Construction PMI rose marginally to 38.4 from 38.2 but remained well below the neutral 50.0 threshold, indicating a sustained downturn in activity. Figure 3 shows construction output has now fallen every month since January 2025, with June marking the second-steepest decline since the onset of the pandemic. While cost pressures moderated and supply chain disruptions became less severe compared with April and May, demand remained weak across much of the sector. Commercial construction proved the most resilient segment, with activity declining at a slower rate than the previous month,