U.K. Manufacturing PMI rises to its Highest since August 2024

  • A closely watched barometer of the health of the United Kingdom’s (U.K.’s) manufacturing sector rose to its highest since August 2024 in January 2026 as inflows of new work increased by the most in nearly four years, adding to signs of a pickup after a sluggish end to 2025.
  • The S&P Global Purchasing Managers' Index (PMI) for British manufacturing rose to 51.8 in January from 50.6 in December, slightly higher than an earlier provisional estimate of 51.6. For the PPI reading, above 50 signals expansion in business activity, while below 50 indicates a contraction.
  • The monthly survey of about 650 manufacturers showed new export orders rose for the first time in four years in January, while optimism about the year ahead reached its highest level since before the 2024 autumn budget. Factories reported receiving a higher volume of orders from Europe, the U.S. and China.
  • "UK manufacturing made a solid start to 2026, showing encouraging resilience in the face of rising geopolitical tensions," said Rob Dobson, a director at S&P Global Market Intelligence. "There was also a positive bounceback in business confidence, which rose to its highest level since before the 2024 Autumn budget," he added.
  • The upbeat survey contributes to the growing evidence that the U.K. economy has strengthened in recent months. Outside of the PMI reading, official figures showed retail sales performed better than expected in December, and Gross Domestic Product (GDP) rose by an unexpected 0.3% in November.
  • Prime Minister Keir Starmer and Finance Minister Rachel Reeves have said they think the economy can outperform the modest 1.4% growth rate which the government's independent Office for Budget Responsibility has pencilled in for 2026.
  • That said, signs that the economy is picking up are expected to persuade the nine members of the Bank of England’s monetary policy committee (MPC) that they should hold off on a rate cut until they can see more data showing that inflation is slowing. Official figures showed inflation was 3.4% in December, down from the summer’s high of 3.8%, but still some way off the Bank’s target rate of 2% from November.

(Source: Reuters & The Guardian)