Key Takeaways

• Strongest expansion in 4 years: The S&P Global UK Manufacturing PMI rose to 53.9 in May from 53.7 in April — the seventh consecutive month above the 50-point growth threshold.
• Production expands for second month: Growth driven by intermediate and investment goods; consumer goods output dipped slightly.
• New orders rise for sixth month: Supported by demand from China, Europe, Japan, North America, and South Korea.
• Input prices near 4-year high: Cost pressures surged across chemicals, electronics, energy, fuels, metals, plastics, packaging, and timber.
• Iran war a key driver: Middle East conflict, Hormuz restrictions, and shipping delays were specifically cited as sources of price and supply chain pressure.
• Supply chains badly strained: Vendor lead times lengthened substantially, with Hormuz disruptions delaying deliveries.
• Front-loading behavior: Clients stockpiled purchases ahead of expected price rises and supply disruptions.
• Input buying up for second month: Manufacturers increased purchasing volumes, leading to the first rise in purchase stocks in over 3.5 years.
• Selling prices fastest since July 2022: Manufacturers are passing higher costs on to customers.
• Optimism at 3-month high: Nearly half of respondents expect output growth over the coming year.

UK manufacturing expanded at its fastest pace in four years during May, with the S&P Global UK Manufacturing PMI rising to 53.9 from 53.7 in April — marking the seventh consecutive month of growth above the 50.0 threshold.

Manufacturing production increased for the second straight month, driven by expansions in the intermediate and investment goods industries, while consumer goods output declined slightly.

New orders rose for the sixth consecutive month, supported by higher demand from domestic and overseas clients including mainland China, Europe, Japan, North America, and South Korea.

Input Prices Near 4-Year High

However, manufacturers faced mounting challenges as input price inflation accelerated to a near four-year high. Companies reported increased costs for chemicals, electronics, energy, foodstuff, fuels, plastics, metals, packaging, paper, and timber.

The war in the Middle East, commodity market gyrations, geopolitical strife, supply chain issues, material shortages, tariffs, rising labor costs, and higher taxes all contributed to price pressures.

Hormuz Disruptions Strain Supply Chains

Supply chains remained strained in May, with average vendor lead times lengthening substantially. Shipping delays linked to the war in the Middle East and restrictions through the Strait of Hormuz disrupted deliveries.

Some manufacturers indicated clients were front-loading purchases to mitigate expected price rises and supply chain disruptions. This precautionary buying contributed to increased new business intakes during the month.

In response to supply chain concerns and rising purchase prices, UK manufacturers increased input buying volumes for the second successive month — leading to the first rise in stocks of purchases in over three and a half years.

Average selling prices increased at the quickest pace since July 2022, with manufacturers passing higher input costs on to customers.

Optimism Remains Resilient

Business optimism among UK manufacturers rose to a three-month high in May, with almost half of survey respondents forecasting output growth over the coming year.