The UK manufacturing industry has commenced the second half of 2024 on a positive note, with a notable upsurge in production, new orders, and workforce expansion, marking the first increase in employment levels since September 2022. These developments have been outlined in the recently released seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI).
Highlights from the UK Manufacturing Sector:
Strengthened Output and New Orders: The sector has witnessed a strengthening of both output and new orders, contributing to its overall growth trajectory. This recovery has been widespread, with production volumes on the rise across consumer, intermediate, and investment goods industries.
PMI Performance: July saw the PMI soar to a two-year high of 52.1, surpassing June’s figure of 50.9 and exceeding the preliminary estimate of 51.8. This extended period above the neutral 50.0 mark, indicating expansion rather than contraction, has been sustained for three months, marking a consistent growth trend since mid-2022.
Operating Conditions: Four out of the five PMI components signal an improvement in the overall operating environment in July. In addition to expansions in output, new orders, and employment, average vendor lead times have also lengthened.
Supply Chain Dynamics: While there has been an increase in delivery delays primarily due to supply chain constraints like the Red Sea crisis, the lengthening of lead times is not solely driven by heightened demand for inputs.
Production and New Business: Manufacturing production registered a third consecutive month of growth in July, with the rate of expansion reaching a near two-and-a-half-year high. This surge in production was attributed to factors such as new product launches, efforts to clear backlogs, and enhanced intakes of new business.
The positive outlook in the UK manufacturing sector, as evidenced by these recent developments, indicates a promising start to the second half of the year, with implications for economic growth and stability.