In August, British factories reported their most robust performance in over two years, driven by strong domestic demand, which outweighed a decline in exports, according to a

survey released on Monday. This data adds to the growing evidence of momentum within the UK economy.

The S&P Global UK Manufacturing Purchasing Managers' Index (PMI) increased to 52.5 in August, up from 52.1 in July, marking its highest level since June 2022. This figure aligns with the preliminary flash estimate for August.

Rob Dobson, Director at S&P Global Market Intelligence, commented on the widespread recovery across the manufacturing sector, highlighting the investment goods sector as a notable performer. Demand for investment goods is often seen as a sign of business confidence in the broader economy.

In addition to rising output and new orders, employment within the manufacturing sector also continued to grow.

The UK economy has outperformed expectations this year, including those from the Bank of England, creating a positive environment for Prime Minister Keir Starmer’s government as it aims to accelerate economic growth.

"The ongoing growth is largely fueled by the domestic market," Dobson noted, though he pointed out that new business from overseas has been in continuous decline since early 2022. This decline is attributed to several factors, including economic weakness in Europe, China’s slowdown, high shipping costs, and global uncertainties. Photo by Kronospan Factory by Linnet, Wikimedia commons.