UK Manufacturing Sector Strengthens in January, Surpassing August 2024 Performance

The UK’s manufacturing sector has delivered a robust start to 2026, with January data revealing significant momentum that eclipses the performance recorded back in August 2024. According to data from Jin10, the Manufacturing Purchasing Managers’ Index (PMI) climbed to 51.8 in January, up from 50.6 the previous month and marginally exceeding the flash estimate of 51.6. This upward trajectory signals strengthening business conditions across the sector after months of moderate pressure.

New Orders Surge, Export Sector Shows First Signs of Recovery

The standout feature of January’s manufacturing report is the dramatic expansion in new orders, which surged from 50.2 to 53.2 on the sub-index—the strongest reading since February 2022. More notably, this expansion marks the first growth in export orders in four years, suggesting that international demand is finally returning to UK manufacturers. Rob Dobson, Director at S&P Global Market Intelligence, emphasized this positive development: “UK manufacturing has started 2026 on a solid footing, showing encouraging resilience. The resurgence in new orders reflects a genuinely positive shift in business outlook compared to the uncertain period that characterized much of 2025.”

The increase in new orders represents a critical turning point for the sector, which had faced headwinds for an extended period. Export-driven growth is particularly significant as it indicates that UK manufacturers are becoming more competitive on the global stage and that international buyers are gaining confidence in British production.

Business Sentiment Rebounds to Highest Levels Since Autumn 2024

Complementing the new orders data, business confidence has experienced a notable recovery. Manufacturing firms’ confidence levels have rebounded to their highest point since the autumn 2024 budget announcements, suggesting that business leaders are increasingly optimistic about the economic trajectory. This renewed sentiment may be driving investment decisions and hiring plans within the sector, despite some remaining challenges.

Employment Pressures Ease, But Costs Continue to Rise

The employment side of the data presents a mixed picture. Manufacturing employment continued its decline in January, though the rate of reduction has moderated to its slowest pace since employment taxes were raised in October 2024. This suggests that while firms are still adjusting their workforce, the pressures on employment are gradually easing.

However, business input costs remain a concern. The increase in input costs reached its highest level since August 2025, reflecting ongoing inflationary pressures on raw materials and operational expenses. Manufacturing firms continue to navigate a delicate balance between managing cost inflation and maintaining competitiveness in an increasingly favorable demand environment.

Looking Ahead

January’s data paints a picture of a manufacturing sector in transition. With new orders climbing, exports recovering, and business confidence recovering to levels not seen since autumn 2024, the outlook has brightened considerably compared to the performance seen in August 2024 and beyond. However, persistent cost pressures and lingering employment adjustments remind manufacturers that challenges remain. If the current momentum can be sustained, 2026 could mark a meaningful turnaround for UK manufacturing.