Manufacturing sector grows again but inflation hits 17-month high

The UK’s manufacturing sector grew for the second consecutive month despite rebounding cost inflation and “weak” exports, according to new data.

Activity in the sector grew last month on the back of growing new orders, but there was a slight slowdown against the previous month.

The closely watched S&P Global/CIPS UK manufacturing PMI survey hit a reading of 50.9 for June, dipping from a 22-month high of 51.2 in May.

Any reading above 50 means a sector is in growth, while a score below this means it is contracting.

The performance of the domestic market remains a real positive, providing a ripe source of new contract wins

The survey found that production volumes grew as companies witnessed “rising intakes of new orders and ongoing efforts to clear backlogs of work”.

There was particular growth across the consumer, intermediate and investment goods categories.

The upturn was driven by strong levels of new work within the domestic market, offsetting a decline in new work from overseas for the 29th month in a row.

Rob Dobson, director at S&P Global Market Intelligence, said: “The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May’s recent highs.

“The performance of the domestic market remains a real positive, providing a ripe source of new contract wins.

“In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe.”

Meanwhile, firms reported that input cost inflation rose at the fastest pace since January 2023.

Purchase prices rose for the sixth successive month, with increases in energy, food, metals and packaging costs.