By David Milliken
LONDON, Nov 2 (Reuters) - British manufacturers started the final quarter of 2026 with the strongest output growth in more than two years, a survey showed on Monday, although fast-rising costs may worry the Bank of England, which looks set to raise interest rates this week.
The S&P Global Purchasing Managers' Index for British manufacturers rose to a five-month high of 52.8 in October from 51.9 in September, in line with an earlier flash estimate. The output component, sometimes seen as a better gauge of underlying conditions, rose to 53.6 from 51.5, its highest since September 2024.
"Rates of growth in output and new orders both gathered pace in October, as companies responded to signs of improving demand in both domestic and overseas markets, including new work received from mainland China, the EU and the US," said Rob Dobson, a director at S&P Global Market Intelligence.
• Manufacturers' input costs rose at the fastest rate since June, and at one of the fastest paces since the last big surge in British inflation in 2022
• Manufacturers' expectations for future output showed the biggest improvement since November 2025
• Growth in new orders was the strongest since July
• Employment growth in the sector ground to a halt after six months of sometimes modest expansion, which firms – especially smaller manufacturers – blamed on high staff costs and the squeeze from rising input prices
• The most recent official data shows manufacturing output rose by 3.0% in the 12 months to August, the biggest increase since March 2024
• S&P's data was collected from October 12-27, before finance minister John Healey's first budget which largely spared businesses from tax increases but announced a 3.9% rise in the minimum wage for next year
(Reporting by David Milliken)