UK Manufacturing PMI January 2026: 18-Month High as Export Orders Surge

The UK manufacturing sector has posted its strongest UK manufacturing PMI reading in 18 months. The S&P Global Manufacturing PMI surged to 51.8 in January 2026. This marks a key milestone as export orders returned to growth for the first time since 2022. The rise from 50.6 in December signals renewed confidence across Britain’s industrial base. After years of tough conditions, the sector has finally turned a corner.

UK Manufacturing PMI Reaches Strongest Reading Since August 2024

The latest S&P Global UK Manufacturing PMI data was collected between 12-27 January 2026. It reveals the most positive picture for the sector in over a year. The headline index reached 51.8, beating the initial reading of 51.6. This marks the third straight month of expansion above the 50.0 threshold.

What the UK Manufacturing PMI Numbers Mean

This is the fastest pace of UK manufacturing growth since August 2024. It shows the UK’s industrial strategy is starting to work. Rob Dobson, a director at S&P Global, noted that “UK manufacturing made a solid start to 2026. It shows strong resilience despite rising global tensions.”

This shift matters a lot. Manufacturing directors and operations managers have faced years of doubt. This data proves that demand is now growing across key markets.

Export Orders Surge: First Growth in Four Years

The most striking part of January’s UK manufacturing PMI data was export orders. They grew for the first time in four years. This reflects stronger demand from Europe, the US, China, and several emerging markets. Global appetite for UK goods is on the rise.

New Orders Hit Highest Level Since 2022

The new orders component jumped to 53.2 from 50.2 in December. It reached its highest level since February 2022. This surge in incoming work gives manufacturers clear forward visibility. They can now plan capacity, staffing, and capital spending for 2026.

For operations managers, this export recovery solves a major problem. Many firms relied too heavily on domestic demand. Orders spread across markets reduce risk. This also creates chances for scale gains that boost output.

Industrial Strategy Manufacturing Investment Gains Momentum

The UK manufacturing PMI surge comes alongside the government’s Modern Industrial Strategy. This plan puts £4.3 billion into advanced manufacturing over five years. It includes up to £2.8 billion in R&D programmes to speed up innovation.

Government Support Boosts Confidence

Cara Haffey, Leader of Industry at PwC UK, said: “The UK manufacturing sector has entered 2026 on a high. The UK Manufacturing PMI reached a 17-month high of 51.8 in January.”

The strategy focuses on building economic strength. It backs key industries such as steel, chemicals, and vital supply chains. This approach is generating confidence among manufacturers. According to Make UK’s Executive Survey with PwC UK, nearly two-thirds of manufacturers believe the chances in 2026 outweigh the risks.

Supply Chain Cost Pressures Persist Despite Growth

While the UK manufacturing PMI data signals strong growth, executives must watch ongoing cost pressures. These continue to hit margins. The survey showed that manufacturers still face high employment and energy costs. Make UK warns these costs are nearing a tipping point. Investment plans could be cancelled or moved abroad.

Managing Rising Input Costs

These supply chain cost pressures reflect broader issues in the sector. The manufacturing sector outlook for 2026 depends on how firms handle them. Input price rises have eased from their peaks. But they still squeeze profits and need careful handling.

For a deeper look at how these cost pressures affect competitiveness, see our analysis on The Triple Cost Squeeze: why UK manufacturing competitiveness hits a tipping point in 2026.

Success depends on passing costs to customers while staying competitive abroad. The return of export order growth gives some room for price changes. But operations managers must balance margin goals with market share targets.

Manufacturing Sector Outlook 2026: Cautious Optimism Prevails

Stronger UK manufacturing PMI readings and better export results have created cautious optimism. But several factors will shape whether this momentum lasts through 2026.

Investment Priorities Shift to Growth

Business confidence indicators show manufacturers feel more positive. The Make UK survey reveals that firms are focusing new spending on product development, market expansion, and digital tools. This signals a shift from defensive cost-cutting to growth strategies.

Deloitte’s 2026 Manufacturing Industry Outlook names five critical trends. These range from agentic AI to adaptive workforce planning.

Regional Variations and Sector-Specific Trends

Analysis of the S&P Global PMI data shows that growth varies across sub-sectors and regions. Companies with strong export reach and advanced processes gain most from the current upturn.

Which Sectors Are Leading UK Manufacturing Growth

The automotive sector, aerospace, and advanced materials makers report the strongest order book gains. Meanwhile, sectors heavily tied to European supply chains still face logistics hurdles that may limit growth.

Manufacturing directors should focus on these trends when planning resources. The sectors showing strongest UK manufacturing PMI alignment with government goals suggest that policy support will boost these trends throughout 2026.

Practical Steps for Manufacturing Operations

The return of export order growth creates both problems and chances. Operations managers must prepare for potential capacity limits as order books strengthen. Quality standards must be kept during any scaling process.

Key Operational Priorities

Workforce planning is vital to handle increased production volumes without risking safety or quality. Current labour market conditions suggest skills shortages could limit growth if demand picks up further.

Supply chain work helps manage input cost pressures while ensuring reliable delivery. The four-year gap in export order growth means some global supply ties may need rebuilding.

Technology spending should align with the Industrial Strategy’s digital priorities. The £2.8 billion R&D funding programme creates chances for manufacturers to access support for automation projects.

Investment and Innovation Chances

The stronger UK manufacturing PMI readings come alongside more funding for innovation. The Industrial Strategy’s focus on key industries creates specific chances for companies in steel, chemicals, advanced materials, and defence sectors.

Accessing Available Funding

Manufacturing directors should check their eligibility for R&D tax credits, innovation grants, and sector-specific funding. The mix of improving demand and supportive policy creates an attractive landscape for smart investments.

Pay close attention to investments that boost export capabilities. This might include compliance certifications for new markets, logistics upgrades, or product changes that meet global standards.

Risk Factors and How to Manage Them

Despite the positive UK manufacturing PMI data, several risks could hold back UK manufacturing growth throughout 2026. Global tensions continue to create doubt in world trade. This is concerning for EU and US markets crucial for UK exporters.

Protecting Against Volatility

Energy cost changes remain a major worry. Many manufacturers warn that current cost levels threaten investment plans. The government’s promised business energy support scheme needs faster rollout. This would prevent companies from putting off growth investments.

Currency swings could also impact export competitiveness. This is especially true if sterling strength reduces the price edge UK manufacturers have gained abroad. Operations managers should consider hedging strategies to guard against bad currency movements.

Forward-Looking Indicators and Strategic Planning

The strength of January’s UK manufacturing PMI data gives directors more confidence for planning. But keeping momentum requires attention to forward-looking signals. The new orders component at 53.2 suggests order book strength will continue into Q2 2026.

Building Scenario Plans

The lasting nature of export order growth depends on global economic conditions. Trade policy changes beyond individual firms’ control also play a role. Manufacturing executives should develop planning frameworks that account for potential breaks to global demand.

Business confidence surveys suggest manufacturers are shifting from survival mode to growth strategies. This transition requires careful balance of ambition with operational abilities.

Technology and Skills Development Priorities

The UK manufacturing PMI improvement comes as tech advancement speeds up across multiple areas. AI tools, advanced robotics, and digital twin technologies are becoming easier to access for mid-sized manufacturers.

Investing in People and Technology

The Industrial Strategy’s emphasis on automation creates chances for funding and expertise. But success requires parallel investment in skills development. Teams must be able to operate and maintain new systems well.

Manufacturing directors should focus on tech investments that deliver clear returns. The current upturn in UK manufacturing PMI performance provides the financial base for such investments. Timing and selection remain key success factors.

Conclusion: Capitalising on UK Manufacturing Growth

The surge in UK manufacturing PMI to an 18-month high marks a major turning point. The return of export order growth for the first time in four years shows that global competitiveness is improving. Demand for UK manufactured goods is on the rise.

However, this recovery needs careful nurturing through strong operations and smart investment. The mix of supportive industrial strategy manufacturing policy, improving demand, and tech advancement creates unprecedented chances. Manufacturers willing to invest in their future stand to gain most.

For manufacturing directors and operations managers, the current environment demands balance. Capitalise on growth chances while managing persistent cost pressures and operational risks. Companies that navigate this transition well will emerge stronger and better positioned for sustained growth.

The 18-month high in UK manufacturing PMI provides cause for optimism. But turning this data into lasting business success requires continued focus on the basics. Strong operations, customer satisfaction, and smart innovation remain essential. The foundation for growth is now in place. The work begins now.