British manufacturers have recorded their strongest order books since mid-2024, driven by a sharp rebound in export demand and stabilising domestic conditions. The latest Purchasing Managers’ Index for UK manufacturing climbed to 53.8 in July, firmly above the 50-point threshold that separates expansion from contraction.
The reading, compiled by S&P Global and the Chartered Institute of Procurement and Supply, marks the fifth consecutive month of expansion and the highest level since June 2024. New export orders grew at their fastest pace in 28 months, with particular strength reported from North American and Middle Eastern markets.
“The narrative around British manufacturing has shifted noticeably in recent months,” said Robert Firth, chief economist at Make UK, the manufacturers’ trade body. “After a prolonged period of subdued demand and cost pressures, we are now seeing genuine momentum. Exporters are benefiting from a more competitive sterling exchange rate and improving economic conditions in key trading partners.”
The aerospace and defence sector led the gains, posting its strongest output growth in over a decade as global defence spending continues to rise. Automotive manufacturing also contributed significantly, with production volumes up 11 per cent year-on-year as supply chain bottlenecks that plagued the industry through 2024 and early 2025 have largely resolved.
Employment in the sector grew for a third straight month, though firms continue to report difficulties filling skilled engineering and technical roles. The shortage of qualified workers remains the most frequently cited constraint on capacity, ahead of raw material costs and energy prices.
Input cost inflation eased to its lowest level since January, offering some relief to manufacturers who have weathered elevated energy and material costs for much of the past three years. However, firms noted that wage pressures continue to build as they compete for talent in a tight labour market.
Analysts at Barclays noted that the manufacturing recovery, while encouraging, remains uneven across subsectors. “The headline figures are positive, but smaller firms in consumer-facing manufacturing are still finding conditions challenging,” the bank’s latest industrial briefing noted. “The divergence between large exporters and smaller domestic manufacturers is something to watch through the second half of the year.”