Key facts
- UK manufacturing output grew at its fastest pace in 21 months in June.
- Firms stockpiled goods in anticipation of further trade turmoil related to the Iran war.
- The manufacturing PMI score was 52.5 in June, down from 53.1 in May.
- New orders increased at a slower pace, suggesting a potential fade in momentum.
- Exports continued to grow for the sixth consecutive month.
- Employment in the manufacturing sector also saw an increase.
The UK manufacturing sector demonstrated resilience in June, with output growing at the fastest pace in 21 months, according to a survey by S&P Global. This growth was largely attributed to firms stockpiling goods in anticipation of further trade disruptions stemming from the Iran war.
The overall Purchasing Managers' Index (PMI) for manufacturing stood at 52.5 in June, a slight decrease from May's four-year high of 53.1. While production levels expanded, this was despite new orders increasing at a slower rate, indicating a potential softening of demand.
Despite global tensions, exports continued to rise for the sixth consecutive month, and employment within the sector also saw an increase. However, concerns are mounting about the sustainability of this growth, with analysts warning that the boost from stockpiling is likely to fade in the latter half of the year.
Rob Dobson, director at S&P Global, expressed concern that a slowdown in stockpiling could impact manufacturers, and noted that optimism for the year ahead remains subdued due to geopolitical tensions and uncertainty surrounding government policy. Business owners are looking to the next Prime Minister, widely expected to be Andy Burnham, to prioritize the "reindustrialisation" of the UK.
Industry leaders like Stephen Phipson of Make UK are urging the next government to focus on reducing industrial energy prices, citing that high costs are driving manufacturers to consider or already move production overseas. Cara Haffey of PwC UK also highlighted the need for a revised industrial strategy and energy policy.