UK manufacturing activity cools despite stockpiling boost to output, PMI shows

LONDON, July 1 (Reuters) - British manufacturing activity cooled in June despite a boost to output from stockpiling ahead of price hikes and supply chain problems stemming from the Middle East conflict, a closely watched industry survey showed on Wednesday. 

The final version of S&P Global's UK ‌Manufacturing Purchasing Managers' Index for June fell to 52.5, below a preliminary estimate of 53.1 and May's 53.9.

Readings above 50 denote an expansion in activity.

The survey's output index was the highest since September 2024 at 52.6, up from 52.2.

However, growth in new orders slowed sharply — chiming with a Confederation of British Industry survey published last week.

"The UK manufacturing sector ended the second quarter of the year on a positive note," Rob Dobson, director at S&P Global Market Intelligence, said. 

"Sustaining the upturn is becoming a bigger concern. Manufacturers are currently benefiting from client strategic stockpiling, as they safeguard against supply chain disruptions and expected price rises. A drop in the rate of growth of new work intakes suggests this boost is already starting to fade." 

Manufacturers' input costs rose at the slowest pace since March, just after the start of the conflict in the Middle East.

The Bank of England, which held interest rates steady in June, is closely watching how higher energy prices caused by the closure of the Strait of Hormuz feed into the economy.

Supplier delivery times lengthened by the smallest amount since February, the survey showed. 

The ​manufacturing PMI's employment index in June signalled growth for a third month running but at a slower pace than in May. Firms turned slightly less ​optimistic about the year ahead.

(Reporting by Suban Abdulla; Editing by Hugh Lawson)