UK Manufacturing Growth Picks Up as Trump Tariff Chaos Eases 2026

UK manufacturing growth accelerated in July as the impact of Trump tariff chaos began to ease, according to the latest S&P Global PMI survey. The sector expanded for the fourth consecutive month, with output rising at the fastest pace in nearly two years, signaling a resilient recovery despite ongoing global uncertainties.

Manufacturing Output Rises at Fastest Pace in Two Years

The S&P Global purchasing managers’ index (PMI) slipped to 51.9 in July from 52.5 in June, but any reading above 50 indicates expansion. The slight dip was attributed to concerns over a potential prolonged Middle East conflict, which could disrupt oil and gas supplies and push up production costs. However, manufacturers reported a strong increase in new orders from both domestic and export clients, marking the eighth consecutive month of order growth.

The recovery is particularly notable given the severe headwinds the sector faced in 2025, including the imposition of US tariffs under the Trump administration and a cyberattack on Jaguar Land Rover that halted production. The easing of tariff-related supply chain disruptions has allowed manufacturers to rebuild momentum, with new export orders flowing in from the US, Canada, the EU, China, India, and South Korea.

Employment Growth Remains Cautious

Despite the uptick in production, the labour market showed only modest improvement. Staffing levels rose for the fourth straight month, but the pace of hiring slowed to near-stagnation, reflecting lingering uncertainty about the future. Companies remain cautious about committing to new hires until they see more sustained demand and clarity on geopolitical risks.

Key Drivers Behind the Manufacturing Recovery

• Improved global supply chains after the chaos caused by US tariffs in 2025.
• Rising new business from both domestic and export markets.
• Stabilisation of trade relations post-Trump tariff adjustments.
• Increased demand from key trading partners, including the US, EU, and Asia.

Comparison: PMI Trends Over the Last Six Months

While the PMI eased slightly in July, the underlying data shows a manufacturing sector that is firmly in expansion territory. The improvement in supply chains and the rebound in export orders are positive signals, but the cautious hiring trend highlights that businesses are still wary of potential disruptions.

What This Means for the UK Economy

The manufacturing sector's resilience is a bright spot for the UK economy, which has faced sluggish growth over the past year. The easing of Trump tariff chaos has removed a major obstacle, allowing factories to operate more efficiently and compete globally. However, the shadow of the Middle East conflict and its potential impact on energy prices could dampen future growth if the situation escalates.

Rob Dobson, Director at S&P Global Market Intelligence, noted that July brought “further encouragement for the UK manufacturing sector.” He emphasised that the rebound in production and new orders is a positive development, but stressed the need for continued vigilance regarding geopolitical risks.

Key Takeaways for Businesses and Investors

• UK manufacturing is in a growth phase, with output rising at the fastest pace in two years.
• Supply chain improvements are boosting export competitiveness.
• Hiring remains subdued, indicating cautious business sentiment.
• Geopolitical risks, especially in the Middle East, could threaten the recovery.

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