1st Jul 2025 10:08
(Alliance News) - The UK manufacturing sector remained in contraction territory in June, numbers on Tuesday showed, though the downturn eased to its least negative reading in five months.
The S&P Global UK manufacturing purchasing managers' index picked up to 47.7 points in June, from 46.4 points in May, though it remained below the 50-point neutral mark. The reading was unchanged from last week's flash estimate.
Output, new orders and employment all contracted, but the rates of decline eased. Business optimism also improved to a four-month high.
Vendor lead times extended for the eighteenth consecutive month, but to the least extent since March.
Manufacturing production fell for the eight month in a row, as companies scaled down output in response to weak market conditions and uncertainty surrounding government policy, tariffs and the geopolitical situation.
The rate of contraction in new order intakes was the weakest during the current nine-month period of decline.
Production is expected to be higher in a year's time by 46% of companies, compared to 10% forecasting a decline. This is due to hopes for a sales recovery, new product launches, efforts to move into new markets, investment spending, organic growth opportunities, planned business expansions and diversification, S&P Global said.
Job cuts at manufacturers were reported for the eighth month, with losses across all product categories and company sizes. The steepest cuts were at large-scale producers.
"Although the downturn in UK manufacturing continued in June, the latest PMI survey provides signs of conditions stabilising. Production, new orders and employment all fell at slower rates, while business optimism picked up to a four-month high. The orders-to-inventory ratio, a reliable bellwether of future production trends, also climbed sharply to its highest since August 2024. Inflation of both input costs and selling prices meanwhile nudged lower to hint at a softening inflation trend," said S&P Global Market Intelligence Director Rob Dobson.
"That said, any hoped for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects, as manufacturers continue to caution their optimism with concerns about heightened geopolitical tensions, weak global markets, tariff uncertainties and fears over the direction of future government policy."
The survey features a panel of 650 manufacturers. The responses were collected between June 12 and 25.
The service and composite PMI readings will be released on Thursday, with the construction PMI reading to follow Friday.
By Michael Hennessey, Alliance News reporter
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