UK’s PMI Manufacturing was finalized at 50.9 in June, slightly down from May’s 22-month high of 51.2. This marks a continued period of growth for the sector, but with some emerging concerns.
Rob Dobson, Director at S&P Global Market Intelligence, commented, “The UK manufacturing sector is enjoying its strongest spell of growth for over two years”. Performance of the domestic market remains a “real positive.” However, he noted the persistent challenges in export markets, with manufacturers struggling to secure new business in the US, China, and mainland Europe.
Despite the overall optimism for future growth, manufacturers are focusing heavily on cost minimization and cash flow protection. This cautious approach has resulted in further job losses, cuts to non-essential spending, and leaner stock holdings. The renewed cost inflation pressure is also a significant concern, with input prices rising at the fastest pace since early 2023.
This surge in manufacturing costs will likely heighten worries among hawkish policymakers at BoE regarding the persistence of underlying inflationary pressures.
