UK Manufacturing Recovers Momentum as Employment Continues to Decline

The UK manufacturing sector started 2026 with mixed signs of recovery. On one hand, indicators point to robust demand; on the other, the labor market still faces pressures. According to data released by Jin10, the January Manufacturing PMI reached 51.8 points, its best performance since the second half of 2024. The result surpassed December’s reading (50.6) and confirmed preliminary expectations (51.6), suggesting that sector resilience persists despite doubts surrounding the UK economy.

Significant Boost in New Orders

The performance gained strength mainly due to the behavior of new orders, which surged to 53.2 points—the highest level since early 2022. This jump reflects a significant change in international trade, marking the first growth in export orders recorded in four years. This recovery in exports, after a long contraction period, suggests that UK producers are able to compete again in global markets.

Rob Dobson, Director of S&P Global Market Intelligence, commented: “The UK manufacturing industry entered 2026 on solid footing, demonstrating promising resilience. Business optimism has also shown a sharp rebound, reaching its highest level since the fiscal adjustment in fall 2024.”

Persistent Pressure on Employment and Costs

However, not all signals are positive. Employment in the manufacturing sector continues to decline, although the rate of decrease has significantly moderated. This is the lowest reduction rate since the payroll tax rate was increased in October 2024. This slowdown in job cuts may indicate that companies are beginning to recover from the fiscal shock.

Conversely, business input costs have reached their highest level since mid-2025, pressuring manufacturing margins. This combination—external demand improvement coupled with cost pressures—defines the 2026 outlook for the sector: moderate optimism surrounded by inflationary challenges that continue to decline but still require management attention.