British manufacturers started the final quarter of 2026 with the strongest output growth in more than two years, a closely watched survey showed on Monday, in a rare bright spot for an economy that has struggled for momentum.
The S&P Global purchasing managers’ index (PMI) for British manufacturing rose to 52.8 in October from 51.9 in September, a five-month high and in line with an earlier flash estimate. A reading above 50 indicates expansion, and the October figure points to a sector gathering pace rather than merely stabilising.
The detail was stronger still. The output component of the survey, often seen as a better gauge of underlying conditions than the headline index, climbed to 53.6 from 51.5, its highest since September 2024. Growth in new orders also quickened, reaching its strongest since July, and manufacturers’ expectations for future output showed their biggest improvement since November 2025.
“Rates of growth in output and new orders both gathered pace in October, as companies responded to signs of improving demand in both domestic and overseas markets, including new work received from mainland China, the EU and the US,” said Rob Dobson, a director at S&P Global Market Intelligence.
The official data point in the same direction. Manufacturing output rose by 3.0% in the 12 months to August, the biggest increase since March 2024, according to the most recent official figures cited in the survey release.
There is, however, a sting in the numbers. Manufacturers’ input costs rose at the fastest rate since June, and at one of the fastest paces since the last big surge in British inflation in 2022. That will worry the Bank of England, which looks set to raise interest rates this week, as it weighs how much of the cost pressure will feed through to consumer prices.
The jobs picture also softened. Employment growth in the sector ground to a halt after six months of sometimes modest expansion, which firms — especially smaller manufacturers — blamed on high staff costs and the squeeze from rising input prices.
One caveat applies to the survey itself: S&P’s data was collected between October 12 and 27, before finance minister John Healey’s first budget, which largely spared businesses from tax increases but announced a 3.9% rise in the minimum wage for next year. How firms respond to that change will show up in the months ahead.
For now, though, the survey offers the government a welcome headline at the start of the final quarter: factories are busier, order books are fuller, and manufacturers are more optimistic about what comes next than they have been for almost a year.
Note: the featured image is a file photo of the Honda manufacturing plant at South Marston, Swindon, taken in 2006, not a photograph of current production.
Sources: Reuters, “UK October manufacturing PMI shows fastest output growth in two years”, 2 November 2026, https://www.reuters.com/world/uk/uk-october-manufacturing-pmi-shows-fastest-output-growth-two-years-2026-11-02/
