British manufacturing industry stabilizes and improves: The PMI hits a 17-month high in January, staying above the boom-bust line for three consecutive months.

A highly anticipated survey shows that the UK manufacturing sector has had one of its best months since the Labour Party came into power, with the industry gradually recovering from the impact of increased taxes and geopolitical turmoil. The S&P Global Manufacturing Purchasing Managers' Index (PMI) for January rose to 51.8, up slightly from the previous month's 50.6 and slightly above the initial estimate. This index has been above the key threshold of 50 for three consecutive months, indicating that the industry is in the expansion zone. Current levels of manufacturing activity in the UK have recovered to near the peak reached in August 2024, after the Labour Party won the general election. The report shows that despite UK Chancellor of the Exchequer Rachel Reeves raising domestic labor costs and President Trump's tariff policies impacting global demand, the UK manufacturing sector has shown signs of stabilizing and improving. S&P Global Market Intelligence Director Rob Dobson said, "In the early months of 2026, the UK manufacturing sector has shown resilience in the face of heightened geopolitical tensions, demonstrating encouraging strength." Thanks to growth in export sales to Europe, the US, and China, new export orders for the UK manufacturing sector saw their first improvement in four years, driving output to its fastest growth since October of last year. All categories of manufacturing companies recorded growth in new orders. The employment market also showed signs of stabilization: while S&P data shows that manufacturing employment has been decreasing for 15 consecutive months, the extent of layoffs this month reached the lowest level in this downturn cycle. Employment growth was seen in investment goods manufacturing companies, while the workforce in intermediate goods and consumer goods manufacturing companies continued to shrink. Currently, the UK manufacturing sector still faces multiple challenges: rising labor costs and raw material prices, as well as adverse weather conditions and product shortages leading to delivery delays and pressure on supply chains. However, businesses are increasingly optimistic about the future. Boosted by factors such as the expected alleviation of global negative influences, improved export demand, and the implementation of corporate investment plans, the manufacturing business confidence index reached a 17-month high. Dobson added, "Although businesses continue to have ongoing concerns about the geopolitical environment, government policies, and trade disputes, the UK manufacturing sector is now focusing on future development opportunities."