The manufacturing sector is growing again, but inflation has reached a 17-month high

The UK’s manufacturing sector grew for the second month in a row despite a rebound in cost inflation and “weak” exports, new data shows.

Activity in the sector increased last month thanks to the growing number of new orders, although there was a slight slowdown compared to the previous month.

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

Any reading above 50 means the sector is growing, while a reading below means it is shrinking.

The study found that production volumes increased as companies saw “increasing levels of new order intake and ongoing efforts to clear backlogs of work.”

In particular, growth was recorded in the categories of consumer goods, intermediate goods and investment goods.

The economic recovery was driven by a large number of new orders in the domestic market, which offset the decline in the number of orders from abroad for the 29th consecutive month.

Rob Dobson, director of S&P Global Market Intelligence, said: “The UK manufacturing sector is seeing its strongest period of growth in over two years, and in June, growth in output and new orders remained solid, similar to recent peaks in May.

“The domestic market performance remains really positive and represents a solid source of new business.

“On the other hand, continued weak export performance is concerning, with manufacturers reporting difficulties in attracting new customers in several key markets, including the US, China and continental Europe.”

Meanwhile, companies said input cost inflation rose at its fastest pace since January 2023.

Purchase prices increased for the sixth month in a row, and the costs of energy, food, metals and packaging also increased.