GB: PMI Manufacturing Final

Highlights

UK manufacturing entered 2026 with renewed momentum, marking a clear shift from stabilisation to expansion. The headline PMI rose to 51.8 in January, its highest level in 17 months, confirming a third consecutive month of growth. Output and new orders strengthened in tandem, signalling demand-led expansion rather than short-term inventory effects.

A notable development was the rebound in export demand. New export orders increased for the first time in four years, reflecting improved access to European, US and Asian markets. This external impulse, combined with customer restocking, helped lift production in consumer and investment goods, although intermediate goods remained under pressure. Growth was uneven, led by large manufacturers, while SMEs continued to face declining output and employment.

Confidence improved sharply, reaching its highest level since before the 2024 Autumn Budget. Firms cited expectations of stronger market confidence, new product launches and planned investment. Labour market conditions also edged towards stabilisation, with job losses slowing markedly and employment rising in investment goods firms. Still, margin pressures persist as input and output prices rose, and supply chains remained stretched.

Overall, the latest data point to a broadening but still uneven recovery, increasingly supported by exports and business confidence rather than domestic demand alone. This update takes the RPI to 64 and the RPI-P to 66, meaning that economic activities continue to outpace market expectations in the UK.

Market Consensus Before Announcement

Index expected unrevised in the January final from the January flash at 51.6 and up from 50.6 in December.

Definition

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.

Description

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.

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