UK Manufacturing Activity Slows to Four-Month Low in July

• UK manufacturing activity expanded for a ninth consecutive month in July 2026, but slowed to a four-month low, with the S&P Global Purchasing Managers' Index (PMI) revised down to 51.9 from 52.5 in June. The reading was also below the earlier flash estimate of 52.8, pointing to a renewed impact from the war on Iran towards the end of the month.
• S&P Global said the month-on-month decline reflected a steep reduction in stocks of purchases, slower jobs growth, and a sharp easing in the rate of increase in vendor lead times. Despite the slowdown, the PMI remained above the 50-point threshold, signalling continued expansion.
• The manufacturing output index rose to 52.9 from 52.6, marking the strongest growth since September 2024, although the increase was smaller than the flash estimate of 53.6. Small manufacturers reported a mild decline in production, while medium and larger firms continued to report growth.
• Manufacturers reported the smallest increase in input costs since February, while employment levels stagnated. The survey was conducted between July 9 and July 28, spanning the breakdown of the U.S.-Iran truce and the announcement of the Houthi naval blockade on Saudi Arabia, which pushed oil prices above US$100 per barrel on July 23 and 24.
• Official data also showed manufacturing output increased 2.3% year-on-year in May, the largest annual increase since March 2024, suggesting the sector continued to benefit from stronger production despite slowing momentum in July.
• UK manufacturing continued to expand in July, however, the weaker headline PMI, stagnant employment and renewed supply pressures suggest the sector’s recovery remains vulnerable to further geopolitical and energy-market disruption.

(Source: Reuters)