UK manufacturing output growth accelerates in October as cost pressures build
British manufacturers begin the final quarter of 2026 with their strongest output growth in more than two years, pointing to firmer demand at home and abroad. The improvement comes as input costs rise at one of the fastest rates since the 2022 inflation surge, adding to pressure on the Bank of England ahead of an expected interest rate increase this week.
Highlights
- S&P Global's UK manufacturing PMI rises to 52.8 in October from 51.9 in September, with output at 53.6, the highest since September 2024.
- New orders increase at the fastest pace since July, driven by demand from mainland China, the EU, and the U.S.
- Input costs grow at the fastest rate since June, while sector employment stalls due to high staff costs and rising input prices.
October survey signals stronger factory demand
As reported by Reuters, citing S&P Global, its Purchasing Managers' Index for British manufacturers rises to 52.8 in October from 51.9 in September, matching the earlier flash estimate. The output component, often seen as a clearer gauge of underlying conditions, climbs to 53.6 from 51.5, its highest level since September 2024.Rob Dobson, a director at S&P Global Market Intelligence, says growth in output and new orders gathers pace in October as companies respond to improving demand in domestic and overseas markets. He says new work comes from mainland China, the EU and the U.S., helping lift new orders at the fastest rate since July.
Manufacturers' expectations for future output show their biggest improvement since November 2025. Official data also shows manufacturing output rises 3.0% in the 12 months to August, the biggest increase since March 2024.
Cost inflation and labour pressures remain in focus
Input costs rise at the fastest rate since June and at one of the quickest paces since the sharp inflation wave in 2022. That trend may concern policymakers as the Bank of England appears set to raise interest rates this week.Employment growth in the sector comes to a halt after six months of sometimes modest expansion, with firms, especially smaller manufacturers, citing high staff costs and pressure from rising input prices. The S&P Global data is collected between Oct. 12 and Oct. 27, before finance minister John Healey's first budget, which largely spares businesses from tax increases but announces a 3.9% rise in the minimum wage for next year.
Our earlier article explained how persistent inflation and firmer UK economic data have shifted expectations toward a near-term Bank of England rate increase. We noted that price growth remains above the BoE’s target and, alongside policymakers’ signals, has pushed analysts to anticipate tighter policy while watching energy-driven risks and broader market volatility.
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