February saw the recent upturn in UK manufacturing continue, as companies reported rising intakes of new business from both domestic and overseas markets. The outlook for the sector also remained relatively positive, with almost three-fifths of manufacturers expecting output to rise over the coming 12 months. The seasonally adjusted
S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) posted 51.7 in February, little-changed from January's 17-month high of 51.8 but below the earlier flash estimate of 52.0.
The PMI has signalled expansions in each of the past four months. February saw three of its five components (new orders, output and supplier delivery times) at levels consistent with improved operating conditions, in contrast to the declines registered in employment and stocks of purchases.
Manufacturing production rose for the fifth consecutive month, with the rate of expansion the fastest since September 2024 (17-month high).
Companies reported scaling up output in response to higher intakes of new business and slightly better client confidence. The trend in new export orders strengthened, with intakes of new work from overseas rising at the quickest pace for 4.5 years. There were reports of improved demand from mainland China, the European Union (EU), the Middle East and North America.
Consumer goods was the strongest performing sector overall in February, seeing the steepest growth of output, new orders and new export business of the three sub-industries covered. Intermediate and investment goods producers also saw increases in output and new export orders. Investment goods was the only sector to register a decrease in total new business during the latest survey month. Data broken down by company size definitions indicated that output and new orders rose at medium- and largescale enterprises (with large firms generally faring better). In contrast, small manufacturers saw both production and new orders contract.
The outlook for the manufacturing sector remained relatively positive in February, as business optimism stayed close to January's 17-month high. Optimism was linked to new products and markets, improving client confidence, investment in capacity and equipment (including data centres for some firms) and efforts to drive competitiveness. That said, several firms remained cautious, citing uncertainty regarding future Government policy and ongoing geopolitical and global trade tensions.
Labour market stabilisesAlthough February saw manufacturing employment reduced, there were further signs of the sectoral labour market moving closer to stabilisation. Job losses were registered for the 16th successive month, but the rate of contraction was only mild and the weakest during that sequence. The sharpest reduction in staffing levels was again seen at small-size manufacturers. Large firms also reported cuts, whereas medium-size companies saw a slight increase.
The rate of input cost inflation accelerated for the third successive month in February, reaching a six-month high. Increased purchase prices were linked to the rising costs for chemicals, copper, electronic components, energy, gold and silver. There was also mention of general metal price rises and the pass through of higher costs from suppliers (including further references to increases in the NMW (national minimum wage) and employer NI (national insurance) contributions. Supply chains remained stretched, with vendor lead times lengthening for the twenty-sixth month in a row.
Manufacturers passed part of the increase in their costs on to clients in the form of raised selling prices in February. Average output charges increased for the third month in a row, albeit to a slightly lesser extent than in the prior survey month. Data broken down by sector showed that only the consumer goods industry reduced prices (on average), suggesting part of the earlier mentioned solid growth in new business was achieved through price discounting.
Rob Dobson, a director at S&P Global Market Intelligence, said: “UK manufacturing has made an encouraging start to 2026. Output rose at the quickest pace in 17 months during February, building on a solid upturn in January, as companies enjoy rising intakes of new work from both the home and overseas markets. Growth of new export business hit a 4.5-year high, as improving customer confidence in markets such as North America, mainland China, the EU and Middle East led to new contract wins.
“The outlook also remains positive. Business optimism among manufacturers stayed close to January's recent high, with close to three-fifths of all companies expecting to expand production during the coming year. New product launches, rising client confidence and planned investments are all forecast to help generate growth over the next year, offsetting some of the caution companies are still exhibiting due to recent UK Government policy changes and ongoing geopolitical uncertainty, especially in relation to US tariffs.
Positive expectationsHe continued: “Although the promising start to the year and positive expectations for the future are not yet fully reflected in the labour market, there are signs of stabilisation on the jobs front too. The rate of decline in staffing levels was only mild in February and eased to the weakest during the current 16-month jobs downturn.”
Chris Barlow, head of manufacturing at MHA, commented: “The latest Manufacturing PMI shows little movement, reflecting a sector that is cautiously optimistic but still weighed down by uncertainty. Although export demand has picked up, confidence remains fragile. Events over the weekend will cause further uncertainty for the sector, particularly around disruption to supply chains and a potential surge in oil prices.
Looking forward the renewed disruption caused by the ongoing confusion over tariff agreements has also reintroduced uncertainty at an already challenging time, particularly for manufacturers with goods already en route to the US. After months of dealing with the fallout from the UK Budget in November, the sector could do without a further threat from this new level of instability.
Last month’s PMI reached an 18‑month high and wider UK economic indicators have begun to look more positive, suggesting we may be turning a corner. But the picture remains uneven, larger manufacturers are seeing improvements far quicker than SMEs, and any recovery will take time to filter through the system. The tariff situation now raises the broader question — where does the economy go from here?
Looking ahead to the Spring Statement tomorrow, manufacturers needs a clear signal of support. This should include meaningful momentum behind the long‑awaited and somewhat unicorn-like Industrial Strategy, and targeted incentives to help manufacturers invest in technology, AI and ESG. A decisive push now would give businesses the confidence they need to plan, invest and grow.”