UK manufacturing growth cools in June as stockpiling props up output

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UK manufacturing growth cools

Highlights

UK Manufacturing PMI falls to 52.5 in June from May's 53.9, indicating slower factory expansion despite continued output growth.
Manufacturing output index rises to 52.6, driven by client stockpiling, but new order growth slows as stockpiling impact begins to fade.
Input costs rise at the slowest pace since March, while manufacturing employment expands for a third month but hiring momentum weakens.

June PMI shows slower factory momentum

As reported by Reuters and S&P Global, the final UK Manufacturing Purchasing Managers' Index falls to 52.5 in June, below the preliminary reading of 53.1 and May's 53.9. A reading above 50 indicates expansion, but the latest survey points to a slower pace of growth across the sector.

The survey's output index rises to 52.6 from 52.2, its highest level since September 2024. Rob Dobson, director at S&P Global Market Intelligence, says manufacturers are benefiting from strategic client stockpiling as customers seek to protect themselves against supply chain disruption and expected price rises.

Dobson says the sector ends the second quarter on a positive note, but adds that sustaining the upturn is becoming a bigger concern. He says the weaker rate of new order growth indicates the stockpiling boost is already starting to fade.

Cost pressures and policy risks remain in focus

Manufacturers' input costs rise at the slowest pace since March, shortly after the start of the conflict in the Middle East. Supplier delivery times also lengthen by the smallest amount since February, indicating some easing in supply strains even as regional tensions continue to affect trade routes.

The Bank of England, which keeps interest rates unchanged in June, is closely watching how higher energy prices linked to the closure of the Strait of Hormuz feed through the wider economy. The survey also shows the manufacturing employment index signals growth for a third straight month, although hiring expands more slowly than in May and firms become slightly less optimistic about the year ahead.

Our earlier report on the UK energy security debate after disruption to oil flows through the Strait of Hormuz outlined how the latest supply shock has sharpened political pressure over whether to expand North Sea projects such as Rosebank and Jackdaw or double down on renewables. We noted that concerns over supply security, higher costs and industrial jobs—especially after the Grangemouth refinery closure—are forcing policymakers and unions to weigh energy transition goals against near-term economic resilience.

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