LONDON — Britain's manufacturing sector continued to expand in June, but the pace of growth slowed as businesses navigated rising costs and uncertainty surrounding global supply chains.

The latest S&P Global UK Manufacturing Purchasing Managers' Index (PMI) fell to 52.5 in June from 53.9 in May, signalling that the sector remains in growth territory but is losing momentum. Despite the slowdown, factory output reached its strongest level since September 2024, supported by companies increasing production and building inventories.

Manufacturers have been stockpiling materials to reduce the impact of potential price increases and supply disruptions linked to geopolitical tensions. However, analysts caution that weaker growth in new orders suggests the recent boost in production may not be sustained if demand softens in the coming months.

Input cost inflation eased to its lowest level since March, providing some relief for businesses, while employment in the manufacturing sector continued to grow for a third consecutive month. Even so, overall business optimism slipped as firms assessed the outlook for exports, energy prices and global trade.

Economists say the manufacturing sector remains resilient but will depend on stronger domestic and international demand to maintain growth during the second half of 2026.