UK manufacturers are reporting a striking divergence in recent economic data: export orders across the sector reached their highest level in more than four years, yet employment in manufacturing continues to decline, pointing to a complex picture of resilience amid structural challenges.
Exports Lead the Charge
According to the latest S&P Global UK Manufacturing Purchasing Managers’ Index (PMI), export intakes rose sharply in February 2026, outpacing any period since mid-2021. Demand for British factory goods expanded most notably from key overseas markets including China, the European Union, the Middle East and North America, signalling renewed confidence in international trade relationships.
The PMI climbed to 51.7 in February, comfortably above the 50 mark that separates contraction from expansion, and marked the fourth month in a row of rising factory activity — the longest such streak since mid-2024.
Analysts highlight that strong overseas demand is helping to support production, particularly for large and medium-sized manufacturers in consumer goods and other tradable sectors, at a time when domestic orders remain subdued.
Jobs Decline Persists
Despite the upbeat export data, employment figures continue to paint a more sobering picture of UK manufacturing’s internal challenges. The sector has now seen job numbers fall for an extended period, reflecting broader structural shifts and cost pressures. Although the pace of decline has eased compared with previous months, firms are still trimming staffing levels as they grapple with rising input costs, regulatory constraints and competitive pressures.
Costs remain a persistent theme, with manufacturers citing higher prices for raw materials and increased labour expenses in backdrop analysis, which can put pressure on hiring and wage decisions even as output rises.
Structural Shifts Underneath the Headlines
The contrast between rising exports and shrinking jobs underscores a longer-standing trend within UK manufacturing, where productivity gains and automation increasingly shape output patterns even as workforce numbers fluctuate. Despite accounting for approximately 8 per cent of the UK’s economic output and workforce, manufacturing continues to evolve with broader global shifts in trade and technology.
At the same time, external factors — from trade policies and geopolitical tensions to sector-specific challenges such as automotive production fluctuations — continue to influence confidence and investment decisions within the sector.
What It Means for the UK Economy
The data offers a nuanced snapshot of manufacturing’s role in the UK economy as policymakers prepare for the Spring Statement. Strong export performance provides a welcome boost to growth prospects and trade balances, while employment declines underline ongoing structural challenges. Manufacturing’s mixed signals may shape future policy discussions on competitiveness, skills, trade and industrial strategy as the nation seeks to balance growth, productivity and economic resilience.