S&P Global has recorded a slowdown in UK manufacturing growth during August, with the flash manufacturing purchasing managers’ index falling to 51.5 as precautionary stockbuilding eased and factory order growth lost momentum.
The preliminary reading remained above the 50.0 level separating expansion from contraction, but it was below July’s final manufacturing PMI of 51.9 and accompanied by the weakest growth in manufacturing output for five months. The wider private sector performed more strongly, with the composite output index rising from 52.2 in July to 52.5, its highest level since April.
Services supplied most of that acceleration. The flash services PMI increased to 52.8, a six-month high, while manufacturers recorded slower increases in output and new orders. S&P Global linked part of the factory slowdown to reduced precautionary inventory building, which had previously supported goods demand as businesses sought protection against supply disruption associated with the Middle East conflict.
Orders placed to build buffers can lift production and purchasing without representing a permanent increase in final demand. Once stocks reach more comfortable levels, suppliers need new customer business to replace that temporary activity if output growth is to continue at the same pace. August suggests some of that transition is now under way.
Supply conditions have improved from the worst point of the disruption, although they have not returned to normal. Factory delivery delays fell sharply from their April peak but remained widespread, while manufacturing input-cost inflation eased from earlier highs yet continued to run above levels seen through much of the previous three years.
Energy, imported materials, supply disruption, steel tariffs, and food-related costs were among the pressures reported by businesses. Those increases remain commercially awkward even with output expanding, because manufacturers can face higher working-capital requirements and weaker margins before they are able to pass costs through to customers.
The wider survey nevertheless showed improving confidence. S&P Global’s composite indicators were consistent with quarterly economic growth of around 0.3%, while business expectations strengthened to their highest level since the Middle East conflict began in February. Employment continued to fall, but at the slowest rate since October 2025.
Manufacturing data released during the same period provided a useful comparison. The CBI’s August Industrial Trends Survey showed a sharp improvement in factory order books, with the total order balance rising to -25% from -45% in July and export orders reaching a balance of 0% for the first time since June 2022. The CBI survey still recorded falling output and stronger expectations for selling-price increases.
The two surveys measure different populations and indicators, so the readings are not necessarily contradictory. A manufacturer can report that its order book has improved sharply from a weak previous month while still experiencing slower month-on-month growth in incoming work. Together, the surveys describe a sector recovering some demand without yet producing a broad acceleration in output.
Inventory movements help explain part of the difference. During periods of expected disruption, manufacturers and customers can bring orders forward, increase raw-material holdings, and build finished-goods stocks. That raises short-term demand for components, materials, freight, and warehousing, but purchasing can fall back once the immediate supply risk recedes.
Capital-intensive operations remain exposed to the cost side of the equation. Energy-intensive processes, imported components, metals, and freight can absorb cash that might otherwise be directed towards machinery, automation, and productivity investment. Better order books therefore do not automatically translate into stronger capital expenditure while financing and production costs remain elevated.
Interest rates add another constraint. The flash survey retained an inflation signal that gives the Bank of England little reason to move rapidly towards easier monetary policy, even as economic activity improves. Borrowing costs affect machinery purchases, plant expansion, property, and working-capital finance, making the relationship between demand and investment less straightforward than a positive PMI headline suggests.
The sector is also moving into an autumn period when temporary stock effects should become easier to separate from underlying demand. If manufacturers continue receiving stronger export and domestic orders after precautionary purchasing subsides, the recovery will have a firmer base. If orders fade with inventory accumulation, the summer expansion will look rather more dependent on businesses preparing for disruption than customers buying more goods.
August therefore leaves UK manufacturing above the expansion threshold, but without the momentum implied by the stronger services figures. Final PMI data, the next CBI survey, and subsequent production figures will show whether underlying customer demand can replace stockbuilding as the principal support for factory activity.
