Manufacturing output in the United Kingdom reached a 21-month peak in June, as companies increased production to build inventories amid concerns over rising energy costs and potential supply chain disruptions linked to ongoing geopolitical tensions in the Middle East. The latest survey from S&P Global indicated that factory output expanded at its fastest pace since September 2024, driven largely by firms seeking to stockpile goods in anticipation of price increases and logistical challenges.

The S&P Global UK manufacturing Purchasing Managers’ Index (PMI) registered 52.5 in June, down from 53.9 in May but still signalling growth, as readings above 50 mark expansion in the sector. This marks the eighth consecutive month of positive manufacturing activity, covering a range of industries including automotive, aerospace, chemicals, and food and drink processing.

Rob Dobson, director at S&P Global Market Intelligence, attributed the surge in production to manufacturers preparing for anticipated supply chain disruptions and rising costs. “Firms are acting strategically to safeguard against potential interruptions and expected price rises,” he said. However, Dobson noted that the pace of new orders is slowing, suggesting that the initial boost from stockpiling might be diminishing.

The backdrop to these developments involves heightened energy prices following the conflict involving Iran and Israel, which has effectively closed the Strait of Hormuz—the vital shipping route through which a significant portion of the world’s oil is transported. While peace talks between the US and Iran have been held, conflicting reports about the reopening of the Strait have maintained uncertainty, leading many manufacturers to expect ongoing supply chain difficulties.

Manufacturers also face logistical hurdles including freight capacity shortages, port congestion, and customs delays, factors that complicate the delivery and availability of inputs. The sector’s outlook remains cautious, with many companies expressing subdued optimism about growth prospects for the coming year.

This combination of geopolitical uncertainty, rising operational costs, and logistical challenges is poised to shape the manufacturing landscape in the UK through the remainder of 2026.