Britain’s manufacturing sector continued to expand in July, but growth lost momentum as businesses faced mounting uncertainty over taxes, regulation and global instability.
The closely watched S&P Global UK manufacturing PMI recorded a reading of 51.9 last month, signalling continued expansion but marking a slowdown from June’s 52.5 and falling short of economists’ forecasts.
A PMI reading above 50 indicates growth, while a figure below that level points to contraction.
Despite the weaker headline figure, the survey offered signs of resilience. Production, new orders and export demand all strengthened, with manufacturers reporting the fastest increase in output for almost two years.
Rob Dobson, director at S&P Global Market Intelligence, said July brought “further encouragement” for the sector, with improved market conditions helping companies secure new contracts.
Export orders from North America, the European Union, China, India and South Korea helped drive the improvement, while medium and large manufacturers recorded particularly strong production growth.
But beneath the surface, concerns remain over the durability of the recovery.
Smaller firms continued to struggle, while the overall pace of job creation slowed sharply, reaching what analysts described as “near stagnation”. Companies also reduced stock purchasing, reflecting caution over future demand.
Business confidence remained subdued as manufacturers navigated a difficult economic environment shaped by higher taxes, regulatory changes and geopolitical tensions.
Matt Swannell, chief economic adviser at the Item Club, said the loss of momentum came despite rising output and orders, pointing to global trade tensions and domestic policy uncertainty as key pressures on sentiment.
He also highlighted renewed instability in the Middle East as a factor weighing on manufacturers’ outlook, with uncertainty surrounding the collapse of the US-Iran ceasefire adding to concerns over global markets.
The figures suggest Britain’s industrial base is showing signs of recovery but remains vulnerable to external shocks and domestic pressures.
For policymakers hoping to deliver stronger economic growth, the challenge is clear: turning a fragile manufacturing rebound into a sustained expansion while restoring confidence among businesses still wary of the road ahead.
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