According to the latest report by S&P Global’s official release, the seasonally adjusted UK Manufacturing Purchasing Managers’ Index™ (PMI®) rose to 51.8 in January, up from 50.6 in December and slightly above the earlier flash estimate of 51.6. The PMI has now indicated growth for three consecutive months.
Output and Orders Drive Growth
Three of the five PMI components—new orders, output, and suppliers’ delivery times—signaled improved operating conditions. Manufacturing production rose for the fourth month in a row at one of the fastest rates since September 2024. The increase was supported by higher export sales, a stable domestic market, and restocking by customers.
Growth was observed in both the consumer and investment goods sectors, while production in intermediate goods declined. Large manufacturers were the main drivers of expansion, whereas small and medium-sized enterprises (SMEs) saw production drop for the third month running.
Incoming new orders reached their highest pace in nearly four years, with growth across consumer, intermediate, and investment goods industries. Export orders rose for the first time in four years, boosted by increased sales to Europe, the United States, China, and several emerging markets.
Business Confidence at Multi-Year High
Business optimism improved, reaching its highest level since before the 2024 Autumn budget. Around 58% of manufacturers expect output to rise over the next 12 months, citing hopes for better market confidence, planned investments, new product launches, and stronger export sales. Some firms, however, remain concerned about geopolitical uncertainty, UK government policy, and potential tariffs.
Labour Market and Employment
Employment levels continued to decline for the fifteenth consecutive month, but the rate of job loss was the slowest in that sequence. Investment goods producers slightly increased staffing, while SMEs and intermediate goods sectors continued to cut jobs. Redundancies, non-replacement of leavers, cost-saving measures, and margin protection were cited as reasons for the reductions.
Costs and Supply Chains
Supply chains remain stretched, with supplier delivery times lengthening partly due to increased purchasing activity—the fastest in over three and a half years. Input costs and selling prices rose mildly, with higher prices reported for energy, raw materials, metals, packaging, and plastics. Average output charges increased for the second consecutive month at a slightly faster pace than in December.
Outlook
Overall, the January PMI signals a moderate recovery in UK manufacturing, supported by stronger orders and cautious optimism among businesses. While challenges remain, including geopolitical risks and supply chain pressures, the sector is showing resilience as 2026 begins.
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