UK manufacturing growth picks up as Trump tariff chaos eases

Factories in upbeat mood despite fears over economic impact of US war on Iran, poll finds

UK manufacturers ramped up production last month for the fourth consecutive month and at the fastest pace in almost two years, according to a leading survey of the industry.

The S&P Global poll of manufacturers found them in upbeat mood in July, though anxious about the prospect of a long war in the Middle East that would block supplies of oil and gas, and raise the cost of production.

Uncertainty about the outcome of the war meant the S&P Global purchasing managers’ index (PMI) dipped in July, but maintained a run of nine months of expansion. The PMI, which tracks activity in the sector, fell back to 51.9 in July, down from 52.5 in June, despite the rise in manufacturing output growth. A reading above 50 denotes a period of expansion.

The figures come after a torrid two years for the manufacturing industry after the election of Donald Trump and the president’s “liberation day” tariffs that took effect in the spring last year. The industry received a second big blow last autumn when a hack of the computer system at Jaguar Land Rover brought production at the UK’s largest car manufacturer to a halt.

The report said the latest increase in production was strongly linked to “rising intakes of new business from both domestic and export clients”.

Total new orders rose for the eighth successive month, with some companies noting an improvement in the functioning of global supply chains after the chaos caused by US tariffs in 2025.

It said new export orders flowed from the US and Canada, the EU, mainland China, India and South Korea.

However, the recovery has led to only a small increase in employment. “Uncertainty about the future dragged on the labour market in July. Although staffing levels increased for the fourth successive month, the rate of growth eased to near-stagnation and was the weakest during the current upturn,” the report said.

Rob Dobson, the director at S&P Global Market Intelligence, said July brought “further encouragement for the UK manufacturing sector”, as rates of growth in output, new orders and new export business all accelerated.

He said a moratorium on new hiring in July was likely to be short-lived after the influx of new business caused backlogs of work, which should prompt companies to take on more staff.

“This would be assisted if business optimism recovers from its current subdued level. Hopefully progress relating to geopolitics, global trade tensions and the direction of the new UK government’s industrial and tax policies will aid, and not hinder, this process,” he added.

Ginni Cooper, the manufacturing partner at the accountancy firm MHA, said: the manufacturing sector had proved resilient amid yo-yoing commodity prices that had seen the cost of many basic manufacturing goods rise and fall sharply in recent months, including oil and gas.

“Manufacturers are by their nature positive and adaptable to change and these past few months have tested both,” she said.

She said many companies in the industry had welcomed the initiatives announced by Andy Burnham after becoming prime minister, including vocational training in schools .

Matt Swannell, the chief economic adviser to the consultancy the Item Club, was more downbeat about the prospects for the rest of the year.

He said: “We expect the sector to endure a difficult period in the latter half of this year. The conflict in the Middle East is the key wildcard, but the breakdown of the ceasefire has led to a resurgence in oil and gas prices, as well as increasing business uncertainty.

“Higher energy prices will filter through into higher business costs while demand will be hit by the squeeze on disposable incomes from rising inflation and weakening wage growth.”