UK manufacturers show fresh signs of life after election, PMI shows
2024.08.01 05:05
By Andy Bruce
(Reuters) – British factories recorded their best month for two years during July, with output and hiring rising and optimism building after Prime Minister Keir Starmer’s landslide election victory, a survey showed on Thursday.
The S&P Global UK Manufacturing Purchasing Managers’ Index rose to 52.1 from 50.9, its highest reading since July 2022 and up from a preliminary flash reading of 51.8.
Output and new orders increased at the fastest rate since February 2022, while manufacturers added staff for the first time in 22 months.
Other business surveys – such as one published by Lloyds (LON:) on Thursday – have shown a similar boost to business sentiment following the July 4 election result, which delivered a big majority for the Labour Party.Strengthening cost pressures marred an otherwise positive picture, with the survey’s gauges of both input and output prices reaching their highest levels since the first half of 2023.
The Bank of England – which is monitoring price pressures in the economy – is due to announce its interest rate decision for August at 1100 GMT. Economists think it is likely to cut borrowing costs for the first time since 2020 and markets see a roughly 65% chance of a quarter-point cut.
“UK manufacturing has started the second half of 2024 on an encouragingly solid footing,” said Rob Dobson, director at S&P Global Market Intelligence.
“Inflationary pressures remain a blot on the copybook,” Dobson added, citing the ongoing Red Sea crisis and freight issues.
International shipping has been disrupted since November by attacks launched by Yemen’s Houthi militants, an Iran-aligned group who say the attacks are in solidarity with Palestinians in the war between Israel and militant Islamist group Hamas.
Many vessels have opted to avoid the Red Sea route to the Suez Canal, taking the longer journey around the southern tip of Africa instead.
