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(Bloomberg) — UK factories saw new orders grow at the slowest pace this year, as a temporary boost from firms rushing to get ahead of disruption in the Middle East petered out.
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S&P Global’s manufacturing purchasing managers’ index cooled to of 52.5 in June, down from May’s four-year high of 53.9. The number, which reflects overall activity in the sector, was worse than the 53.1 seen in the flash estimate.
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Manufacturing production, specifically, rose at the quickest pace since 2024 in June after the glut of new business in previous months, but new orders barely grew and were the weakest since December, the survey showed. S&P said that “some of the temporary boost manufacturers were seeing from customer front-loading was fading.”
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The sector had been boosted in April and May by stockpiling and a scramble to secure supplies in anticipation of disruption amid the outbreak of war between the US and Iran.
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Separate, official figures on Tuesday showed that growth of 0.7% in manufacturing output helped the UK economy enjoy its strongest expansion in a year during the first quarter. Economists expect a sharp slowdown in GDP growth in the second quarter as the Iran war sapped confidence and pushed up energy costs.
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Nonetheless, the economic outlook facing outgoing Prime Minister Keir Starmer’s successor is brightening since a truce between the US and Iran allowed ships to start moving through the crucial Strait of Hormuz. The breakthrough in talks is expected to mean a lower peak for UK inflation than had been feared.
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S&P’s survey also suggested that inflationary pressures are beginning to moderate in the manufacturing sector. Input costs for factories rose at the slowest pace since March, shortly after the war broke out. Output prices climbed sharply again, albeit at a weaker pace than seen in May.
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