British Manufacturing Cost Pressures Rise Amid Slower Output Growth

British manufacturers faced rising cost pressures in September, marking the first increase in four months, even as output growth slowed to its weakest pace since March. The S&P Global Purchasing Managers’ Index (PMI) report highlighted a broad uptick in input costs, the widest since June, along with faster increases in prices charged by factories. Rob Dobson, director at S&P Global Market Intelligence, noted a significant shift in price measures, indicating renewed inflationary pressures after a period of decline.

The PMI headline reading inched up to 51.9 in September from 51.7 in August, but the output gauge fell to 51.5 from 52.1, reflecting a second consecutive monthly slowdown. Investors are now anticipating a potential interest rate hike by the Bank of England in November, following warnings from Governor Andrew Bailey about the inflationary risks posed by the energy spike from the Iran war.

Business confidence dipped below August’s six-month high, driven by concerns over geopolitical tensions, economic uncertainty, and domestic policy changes. Employment continued to grow for the sixth straight month due to rising new orders and efforts to clear backlogs, though hiring slowed compared to August’s two-year high. The PMI data was compiled from responses collected between September 10 and September 25.