The UK manufacturing sector remained under strain in May, as persistent economic uncertainty and surging input costs weighed heavily on business activity. Although the Manufacturing PMI edged up to 46.4 from 45.1 flash estimate and 45.4 in April, it still signalled contraction for the eighth consecutive month.

Manufacturers continued to experience falling output, new orders, and employment, with export demand dropping even further than April's record decline rate. Despite May's 3-month high, confidence among both consumers and businesses remained low, exacerbated by concerns over global trade, including potential US tariffs and rising costs. Optimism was lowest among small-scale producers versus medium and large-scale producers.

Input cost inflation eased to a 5-month low in May. Still, rising energy bills, global supply chain disruptions, tariffs and freight prices led to higher costs which was passed on to clients in higher selling prices. Today's update leaves the UK RPI at 38 and the RPI-P at 28. Overall, economic activity in general is outperforming market expectations.

No revision from the 45.1 flash is the call for PMI manufacturing final.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 3,000 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The survey covers more than 600 industrial companies and is compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the and S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.