The United Kingdom’s manufacturing sector maintained its eleven-month expansion streak in September, yet faced an easing pace of growth. The S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) report, released on October 1, 2026, indicated that output growth weakened for the second consecutive month. This slowdown comes as manufacturers grapple with escalating energy, transport, and raw material costs, alongside persistent supply chain disruptions.
While the headline PMI edged up slightly to 51.9 in September from 51.7 in August, signalling continued expansion, the underlying figures reveal a more challenging environment. The data, collected between September 10 and 25, 2026, highlights growing pressures that could temper future industrial performance.
UK Manufacturing PMI shows output growth eases despite overall expansion
September marked the UK manufacturing sector’s eleventh consecutive month of expansion, a positive signal of sustained activity. However, the output sub-index decreased to 51.5 from 52.1 in August, recording its weakest production growth in six months. This represents a second consecutive monthly slowdown for the crucial output gauge, indicating a deceleration in actual production volumes.
Manufacturers reported an increase in new orders for the tenth month running, at a faster rate than in August. Demand came from both domestic and export markets, including the US, Asia-Pacific, Brazil, and Australia. Yet, this rise in new business didn’t translate to a proportional boost in overall output, suggesting capacity constraints or efficiency challenges.
Uneven Recovery Across Sub-Sectors
The recovery across the manufacturing sector remains distinctly uneven. Growth was concentrated heavily within investment goods, where production expanded at its fastest rate since late 2017. This suggests a targeted strength in areas producing machinery and equipment for other industries.
Conversely, manufacturers in the consumer and intermediate goods sectors recorded contractions during September. Small manufacturers also experienced sharp falls in production and new business. This contrasts sharply with the continued growth observed among medium-sized and large producers, highlighting a divergence in fortunes across the industry. Such disparity often signals underlying structural challenges within the broader supply management anxiety and economic landscape.
Resurfacing Supply Chain and Inflationary Pressures
Supply chains, a persistent headache for global manufacturing, came under renewed pressure in September. Average vendor delivery times notably increased, with supplier performance deteriorating at its fastest pace since June. S&P Global attributes this disruption to a confluence of factors, including port congestion, shipping delays, and broader geopolitical tensions. These issues led to fresh shortages of crucial raw materials.
The renewed supply chain instability was accompanied by a re-acceleration of inflationary pressures. Input cost inflation rose for the first time in four months, driven by higher prices for chemicals, electronics, energy, and food. Rising transport costs, often linked to elevated diesel prices, further exacerbated the situation for manufacturers across the country.
Rising Costs and SME Vulnerabilities
Manufacturers responded to these escalating costs by increasing their selling prices, marking the tenth consecutive month of output charge inflation. Notably, both input and output price inflation were more pronounced among small and medium-sized enterprises (SMEs) compared to larger producers.
This suggests that smaller firms are less able to absorb cost increases, placing them at a competitive disadvantage. Rob Dobson, Director at S&P Global Market Intelligence, emphasised that higher energy prices contributed to slower demand growth.
He noted that the survey’s price measures had shifted from indicating easing inflationary pressures to a renewed increase, particularly for energy and electronics.
Employment Remains a Bright Spot Amidst Headwinds
Despite the broader slowdown in output growth and the resurgence of inflationary pressures, employment figures offered a positive signal for the UK manufacturing sector. Headcounts increased for the sixth successive month in September, with the rate of job creation remaining close to August’s two-year high. Companies expanded their staffing to manage rising orders and to address growing backlogs of work.
This sustained job growth indicates a continued commitment from manufacturers to meet demand and invest in their workforce. It also suggests that businesses anticipate future activity, despite immediate challenges. The expansion of outstanding business for the second time in three months further underscores the need for increased staffing levels.
Such trends align with a broader positive movement in West Midlands manufacturing jobs, indicating regional resilience.
Eurozone Outperforms UK in Growth Momentum
The UK’s manufacturing expansion in September was slightly weaker when compared to the broader Eurozone. The S&P Global Eurozone Manufacturing PMI climbed from 52.7 in August to 52.9, reaching its highest level since May 2022. Moreover, Eurozone manufacturing output registered a significant rise to 53.6, marking a 55-month high.
The recovery across the Eurozone demonstrated broader momentum, with all eight countries surveyed reporting expansion. New orders in the Eurozone increased at their fastest pace since March 2022, and employment returned to growth after three years of decline.
This upturn is being driven particularly by demand for investment goods, including machinery, equipment, AI, and defence-related equipment. While the Eurozone also experienced renewed inflationary pressure with rising input and output prices, its overall growth trajectory appears more robust.
Navigating Future Challenges and Opportunities
Manufacturers in the UK are cautiously optimistic about the year ahead, even as they face a complex economic landscape. Approximately 49% of companies expect their output to increase over the next 12 months. This optimism stems from planned expansions, new product launches, and expectations for a rebound in market confidence and investment.
However, this confidence remains subdued compared to pre-Middle East war levels, with geopolitical issues and domestic policy uncertainty weighing on sentiment. Rob Dobson noted that the upcoming Budget would be crucial in shaping business confidence.
High industrial energy costs continue to be a significant challenge, with nearly 90% of companies reporting increased bills over the last five years, a factor that could lead to factory closures and a substantial economic impact if not addressed.
Industry bodies advocate for competitive energy costs, business rate reforms, and support for skills gap initiatives. The government has outlined plans through initiatives like the Advanced Manufacturing Sector Plan and the DRIVE35 program to support advanced manufacturing.
Strategic shifts toward diversifying sourcing and bolstering inventory planning are also underway as manufacturers aim to build resilience against future supply chain shocks.
