UK Manufacturing Shows Strongest Output Growth in Nearly Two Years Amid Geopolitical Uncertainty

A leading S&P Global survey indicates that UK manufacturers increased production for the fourth month in a row, reaching the fastest expansion rate in almost two years. The rise is linked to higher intake of new domestic and export orders, with firms reporting a surge in business from the United States, Canada, the EU, mainland China, India and South Korea.

The Guardian

• The S&P Global purchasing managers’ index (PMI) slipped to 51.9 in July, down from 52.5 in June, but remained above the 50-point threshold that signals sector expansion.

The Guardian

• New orders climbed for the eighth consecutive month, supporting the output gains.

The Guardian

• Export orders continued to grow, while overall employment showed only a modest increase; staffing growth slowed to its weakest level during the current upturn.

The Guardian

The manufacturing rebound follows a turbulent two-year period that began after the 2024 election of Donald Trump and the implementation of his “liberation day” tariffs in the spring of 2025. A major cyber-attack on Jaguar Land Rover’s computer system last autumn temporarily halted production at the UK’s largest carmaker. In addition, manufacturers remain anxious about a protracted war in the Middle East, which could disrupt oil and gas supplies and raise production costs.

The Guardian

• Rob Dobson, director at S&P Global Market Intelligence, described July as “further encouragement” for the sector, noting that the surge in new business is creating backlogs that will likely prompt firms to lift hiring moratoriums.

The Guardian

• Ginni Cooper, manufacturing partner at the accountancy firm MHA, highlighted the sector’s resilience amid volatile commodity prices, saying manufacturers have remained “positive and adaptable” despite recent challenges.

The Guardian

• Matt Swannell, chief economic adviser at the consultancy the Item Club, warned that the conflict in the Middle East is a “key wildcard,” expecting higher energy prices to increase costs and dampen demand as disposable incomes are squeezed by inflation and weak wage growth.

The Guardian

• Andy Burnham, prime minister, has announced initiatives such as expanded vocational training in schools, which industry leaders view as supportive of long-term skills development.

The Guardian

While output growth is robust, the slowdown in hiring suggests that the sector’s employment recovery may lag behind production gains. Analysts anticipate that rising energy costs and continued geopolitical uncertainty could pressure margins in the latter half of the year. The effectiveness of government-backed training programs and any easing of Middle-East tensions will be pivotal in determining whether the current expansion translates into sustained job creation and broader economic benefits.

The Guardian