UK manufacturing remained in expansion during September, but renewed inflation pressure and strained supply chains raised operating costs as factories entered the final quarter of the year.
The final S&P Global UK Manufacturing Purchasing Managers’ Index rose to 51.9 from 51.7 in August. Any reading above 50 signals expansion, making September the eleventh consecutive month in which the headline index recorded improving operating conditions.
Output, new orders, and employment all increased, although production growth eased to its slowest pace since March. New business rose across domestic and export markets, while manufacturers continued recruiting for a sixth consecutive month.
The more pronounced movement came through prices. Input-cost inflation accelerated for the first time in four months, with factories reporting a broader increase in purchasing costs and a faster rise in the prices charged to customers.
Rob Dobson, director at S&P Global Market Intelligence, said: “The big shift in September was in the survey’s price measures, which switched from signalling a decline in inflationary pressures to a renewed uplift.”
Energy, transport, and other imported costs contributed to the change. Manufacturers also reported increasing strain across supply chains, with longer delivery times and logistical disruption complicating procurement and inventory planning.
The headline PMI remains consistent with growth, but output expanded more slowly than earlier in the year. Companies are therefore carrying a higher cost base at the same time as the rate of production growth loses momentum.
Where manufacturers have limited scope to pass higher expenditure to customers, renewed input inflation can compress margins even when orders continue to increase. Businesses with energy-intensive production or high imported content are particularly exposed to simultaneous movements in fuel, freight, and component prices.
The price data also feeds into the wider inflation outlook. Manufacturing represents a smaller share of the UK economy than services, but increases in energy, transport, and intermediate goods can move through supply chains before appearing in wholesale or retail prices.
Business confidence remained positive, although below the six-month high recorded in August. Almost half of manufacturers responding to the survey expected production to increase over the next 12 months, supported by expansion plans, product launches, and anticipated improvements in demand.
Investment decisions remain subject to a difficult combination of higher borrowing costs, geopolitical uncertainty, domestic policy changes, and volatile energy prices. The latest survey therefore presents a sector still growing, but with a narrower margin for absorbing additional shocks.
September’s earlier flash PMI had already signalled slower UK growth and rising inflation pressure. The final manufacturing survey provides a more detailed view of factories specifically and confirms that input-price pressures strengthened as the month progressed.
Manufacturers also enter October with access to a new electricity-support programme. The British Industrial Competitiveness Scheme has opened for applications and will remove several indirect electricity costs for qualifying sites from 2027.
That measure addresses structural elements of industrial electricity bills rather than immediate movements in wholesale energy, diesel, shipping, or imported components. Businesses therefore remain exposed to much of the volatility reflected in September’s survey.
Orders and employment are still increasing, but renewed cost inflation means revenue growth will not necessarily translate directly into improved margins. The final quarter begins with UK manufacturing in expansion while the operating environment becomes more expensive and less predictable.
You must be logged in to post a comment.