UK manufacturing activity continued to expand in February, with output rising at the fastest pace in 17 months and export orders climbing at their quickest rate in more than four years, according to the latest S&P Global PMI survey.
The headline S&P Global UK Manufacturing PMI registered 51.7 in February, virtually unchanged from January’s 17-month high of 51.8 and marking the fourth consecutive month of expansion.
Output growth accelerates
Manufacturers reported stronger intakes of new business from both domestic and overseas customers, prompting firms to scale up production. Output rose for the fifth successive month, with the rate of expansion the quickest since September 2024.
New export orders were a key driver of growth, rising at the fastest pace in four-and-a-half years amid improved demand from markets including mainland China, the EU, the Middle East and North America.
Consumer goods producers were the strongest-performing sub-sector, recording the steepest growth in output and new orders, while intermediate and investment goods firms also saw production rise.
Rob Dobson, director at S&P Global Market Intelligence, said UK manufacturing had made an “encouraging start to 2026” as rising new work supported production growth. He added that improving client confidence and new product launches were helping sustain momentum, even as firms remained cautious due to geopolitical uncertainty and policy changes.
Dave Atkinson, Regional Director & UK Head of Manufacturing SME & Mid Corporates at Lloyds, said: “This reflects steady growth in UK manufacturing as operating conditions continue to improve. Currently, expansion is being led by the largest firms, but we could see momentum across the sector as work moves through the supply chain to more SMEs.
“Firms are focused on driving productivity gains while improving efficiency to help offset margin pressures, and many are therefore continuing to invest in skills and technology, including AI, to support more advanced manufacturing processes such as reducing materials waste.”
Employment still under pressure
Despite stronger output, employment levels fell again in February, marking the 16th consecutive monthly decline, though the pace of job losses eased to the weakest in the current downturn. Small manufacturers were hit hardest, while medium-sized firms saw a slight rise in staffing.
Cost pressures also intensified. Input price inflation accelerated to a six-month high, driven by higher costs for metals, chemicals, electronic components and energy. Some of these increases were passed on to customers through higher selling prices.
Business optimism remains strong
Looking ahead, sentiment among manufacturers stayed close to January’s recent high, with almost three-fifths of firms expecting output to increase over the next 12 months.
Investment in new products, improved client confidence and planned capacity spending were cited as key growth drivers, although concerns remain around government policy changes and global trade tensions.
Eurozone factories also return to growth
Across Europe, the manufacturing outlook also improved, with the HCOB Eurozone Manufacturing PMI rising to 50.8 in February, up from 49.5 in January and signalling the strongest improvement in operating conditions since June 2022.
The eurozone’s recovery was driven by a fresh rise in new orders — the strongest since April 2022 — which helped lift production and boost business confidence to a four-year high.
Six of the eight monitored countries recorded expansion, led by Germany, which saw its sharpest improvement in factory conditions in nearly four years.
However, the eurozone also faced mounting inflationary pressures, with input cost inflation accelerating for a third consecutive month to its highest level in more than three years.
UK performance broadly in line with Europe
The UK’s PMI reading of 51.7 puts its manufacturing sector slightly ahead of the eurozone average of 50.8, suggesting Britain’s factory recovery is progressing at a marginally faster pace.
Both regions are benefiting from improving demand and export activity but are grappling with similar challenges around rising input costs and continued job losses.
With optimism strengthening on both sides of the Channel, manufacturers appear to be entering 2026 on firmer footing, though the persistence of cost pressures and geopolitical uncertainty means the recovery remains fragile.
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