UK manufacturing growth slows as shipping delays hit exports, PMI shows

LONDON (Reuters) - British manufacturing activity growth slowed last month from May's 22-month high as ongoing disruption to shipping in the Red Sea contributed to lower demand from overseas customers, a survey showed on Monday.

S&P Global's UK Manufacturing Purchasing Managers' Index dropped to 50.9 in June from 51.2 in May. The final reading was lower than 51.4 in the provisional June data.

S&P said the broad picture was positive, with output and new orders both rising, but employment fell, delivery times lengthened and manufacturers' input costs rose at the fastest pace since January 2023.

"Shipping issues resulting from the Red Sea crisis, low stocks at suppliers, insufficient vendor capacity and port issues all led to longer lead times," S&P said.

While output and overall new orders grew at close to their fastest pace in two years, export orders fell for a 29th successive month, due to the shipping delays and high freight costs.

International shipping has been disrupted since November by attacks launched by Yemen's Houthi militants, an Iran-aligned group who say the attacks are in solidarity with Palestinians in the war between Israel and militant Islamist group Hamas.

Many vessels have opted to avoid the Red Sea route to the Suez Canal, taking the longer journey around the southern tip of Africa instead.

Official figures on Friday showed Britain's manufacturing sector - which makes up 10% of the economy - grew at a quarterly pace of 1.1% in the first three months of 2024, its second-strongest quarterly expansion since the start of 2021.

Goods exports volumes fell by 3.5% in the first quarter, although Britain's Office for National Statistics said this largely reflected trading in non-monetary gold - an erratic item which often distorts British trade statistics.

(Reporting by David Milliken; Editing by Christina Fincher)