By David Milliken
LONDON, Feb 2 (Reuters) – A closely watched barometer of the health of Britain’s manufacturing sector rose to its highest since August 2024 in January as inflows of new work increased by the most in nearly four years, adding to signs of a pickup after a sluggish end to 2025.
The S&P Global Purchasing Managers’ Index for British manufacturing rose to 51.8 in January from 50.6 in December, slightly higher than an earlier provisional estimate of 51.6.
The new orders component rose to 53.2 from 50.2, its highest since February 2022, lifted by the first growth in export orders in four years, which reflected stronger demand from Europe, the United States, China and other emerging economies.
“UK manufacturing made a solid start to 2026, showing encouraging resilience in the face of rising geopolitical tensions,” said Rob Dobson, a director at S&P Global Market Intelligence.
“There was also a positive bounceback in business confidence, which rose to its highest level since before the 2024 Autumn budget,” he added.
Prime Minister Keir Starmer had courted businesses before coming to power in July 2024, but many firms felt let down by big rises in employment taxes in finance minister Rachel Reeves’ first budget in October 2024.
Sentiment was also weak in the months running up to her second budget in November 2025, but has shown signs of improving since as most of her latest round of tax rises will be deferred and is less heavily focused on businesses.
Starmer and Reeves have said they think the economy can outperform the modest 1.4% growth rate which the government’s independent Office for Budget Responsibility has pencilled in for 2026.
The manufacturing PMI showed that employment in the sector continued to fall – though by the smallest amount since Reeves raised employment taxes in October 2024 – while businesses’ input costs rose by the most since August 2025.
S&P said manufacturers reported higher costs for chemicals, energy, food products, freight, metals, packaging and plastics, as well as suppliers passing on higher labour costs after last year’s rise in employment taxes and the minimum wage.
(Reporting by David Milliken; Editing by Toby Chopra)
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