Finance
UK factory downturn shows signs of easing, morale ticks up, PMI shows
Published by Global Banking & Finance Review®
Posted on July 1, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 1, 2025
2 min readLast updated: January 23, 2026
UK manufacturing shows signs of recovery with improved PMI and rising morale, despite ongoing challenges like high input costs and export contraction.
LONDON (Reuters) -Britain's manufacturing sector showed some signs of turning a corner in its long slump and businesses pushed up their prices in June to offset higher labour costs, according to a survey published on Tuesday.
The S&P Global/CIPS manufacturing Purchasing Managers' Index improved for a third month in a row to 47.7 in June from 46.4 in May although it remained below the 50.0 growth threshold for a ninth month in a row.
The reading was unchanged from a preliminary estimate.
The severity of the downturn eased in output, hiring and new orders, the PMI showed.
"That said, any hoped for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects," Rob Dobson, director at S&P Global Market Intelligence said.
The Bank of England, which kept interest rates at 4.25% last month, has said it is focusing on the conflicting inflation risks from a weaker labour market and from higher energy prices due to conflict in the Middle East.
Input costs rose for an 18th month with firms citing higher wages and suppliers raising prices due to finance minister Rachel Reeves' employer payroll tax increase as well as geopolitics and concerns over future government policy.
Companies passed on part of the higher costs to consumers, S&P said.
Hiring shrank for the eighth month in a row and exports contracted at their fastest pace since November, reflecting uncertainty around U.S. President Donald Trump's import tariffs, weaker demand from the United States, Europe and China.
But the share of manufacturers expecting higher output in a year's time rose to 46% as sentiment reached a four-month high.
On Monday, a survey published by Lloyds showed business confidence rose to its highest in nine years.
(Reporting by Suban Abdulla; Editing by Hugh Lawson)
The S&P Global/CIPS manufacturing Purchasing Managers' Index improved to 47.7 in June from 46.4 in May, indicating a slight easing in the downturn, although it remains below the growth threshold of 50.0.
Businesses have increased their prices in June to offset higher labour costs and input costs, which have risen for an 18th consecutive month due to various factors including payroll tax increases.
The share of manufacturers expecting higher output in a year's time rose to 46%, reflecting improved sentiment that has reached a four-month high.
Despite signs of recovery, the manufacturing sector faces potential headwinds that could impact demand, supply chain reliability, and future growth prospects.
A survey published by Lloyds showed that business confidence rose to its highest level in nine years, suggesting a positive shift in the overall economic outlook.
Explore more articles in the Finance category
