Finance
UK factories edge closer to end of downturn, PMI suggests
Published by Global Banking and Finance Review
Posted on August 1, 2025
2 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 1, 2025
2 min readLast updated: January 22, 2026
UK manufacturing shows recovery signs with PMI improvement, though employment challenges persist. Bank of England may cut rates.
LONDON (Reuters) -Britain's manufacturers - hit in recent months by trade wars and higher taxes - moved closer to a return to growth in July and executives were their most optimistic in five months, according to a survey published on Friday.
The S&P Global/CIPS manufacturing Purchasing Managers' Index improved for a fourth month in a row to 48.0 from 47.7 in June, the weakest rate of contraction since January.
July's final reading was slightly weaker than a preliminary estimate of 48.2 and remained below the 50.0 level that represents the threshold for growth for a 10th straight month.
Britain's factories have been hit by fallout from U.S. President Donald Trump's trade tariff increases, finance minister Rachel Reeves' hike in social security contributions for employers and a big increase in the minimum wage.
Friday's survey pointed to an improvement with output of consumer and intermediate goods growing after several months of contraction and a measure of expectations for future output rising to its highest since February.
"The UK manufacturing sector is starting to send some tentatively encouraging signals," Rob Dobson, director at S&P Global Market Intelligence, said.
However, a gauge of employment in the sector fell again as companies grappled with their higher labour costs and there were signs that jobs could take a further hit in the coming months, S&P Global said.
Dobson said manufacturers were likely to remain cautious before Reeves' next annual tax and spending plan in the autumn.
Prices paid and charged by factories increased at roughly the same pace as in June, the PMI showed.
The Bank of England, which is expected to cut interest rates next week, is assessing the persistence of inflation pressures and the extent of a downturn in the jobs market.
The manufacturing sector accounts for around 10% of Britain's economic output. The dominant services sector weakened in July, according to the preliminary PMI. A final PMI for services is due to be published on Tuesday.
(Writing by William Schomberg; Editing by Toby Chopra)
The S&P Global/CIPS manufacturing Purchasing Managers' Index improved for the fourth consecutive month, rising to 48.0, indicating a closer move towards growth.
Britain's manufacturers have faced challenges from trade wars, higher taxes, and increased labor costs, leading to a cautious outlook among executives.
The survey indicated a rise in expectations for future output, reaching its highest level in five months, suggesting some optimism among manufacturers.
A PMI reading above 50.0 indicates growth in the manufacturing sector, while readings below this level, like the current 48.0, signify contraction.
The Bank of England is expected to cut interest rates next week as it evaluates ongoing inflation pressures and the downturn in the jobs market.
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