UK manufacturing activity has reached its highest level in 17 months, driven by a surge in strong overseas orders, as reported by the S&P Global Purchasing Managers’ Index (PMI) survey.
In February, the manufacturing PMI for the United Kingdom stood at 51.7, a slight decrease from January’s figure of 51.8. However, it remains firmly above the critical 50-point threshold, which indicates that the sector is experiencing expansion rather than contraction.
Manufacturing output has increased for the fifth consecutive month, marking a significant trend, with the rate of expansion reaching its fastest since September 2024. Companies participating in the survey reported an encouraging rise in new business intake, reflecting enhanced customer confidence and a better utilisation of production capacity. Notably, new export orders saw their highest growth rate in over four years, signalling robust demand from international markets.
The demand for UK-manufactured goods is reported to be increasing across several key regions, specifically in China, Germany, the wider European Union, the United States, and parts of the Middle East. This diversified demand is crucial for the UK manufacturing sector’s recovery, with large manufacturing firms at the forefront of this upswing, benefiting greatly from stronger order books. Medium-sized manufacturers have also experienced positive effects from the increased demand, although the recovery has not been universal across the sector.
Despite the overall positive outlook, the survey highlighted a contrasting picture within the manufacturing sector, often referred to as a “two-speed” landscape. Large enterprises reported significant expansion in both output and order volumes, showcasing their resilience and adaptability. In comparison, medium-sized firms demonstrated moderate growth, suggesting that while they are benefiting from improved conditions, they are not experiencing the same level of success as their larger counterparts. On the other hand, small manufacturers faced challenges, as they reported declines in both production and new business orders in February.
Economists have expressed concern that smaller companies may be more susceptible to various pressures, including rising energy costs, challenges in securing financing, supply chain instability, and reduced pricing power in competitive markets. These factors could disadvantage smaller firms as larger companies continue to thrive.
Rob Dobson, the director of S&P Global Market Intelligence, commented on the developments, stating, “UK manufacturing has made an encouraging start to 2026. We anticipate that new product launches, coupled with increasing client confidence and planned investments, will drive growth in the coming year.
“These factors are expected to help offset some of the hesitancy that companies are currently exhibiting, which is largely due to recent changes in government policy and ongoing geopolitical uncertainties, particularly concerning US tariffs.”
This outlook provides a cautiously optimistic perspective on the future of UK manufacturing amidst a complex economic landscape.
