Last month, food and drink manufacturing registered 59.2 on the tracker’s measure of output growth, up from 56.9 in June.
This represented the fastest growth rate of any of the 14 sectors monitored, which was supported by demand growth that was the strongest of any manufacturing sector. A reading on the tracker above 50.0 indicates expansion, while a reading below 50.0 indicates contraction.
Nine of the 14 UK sectors monitored by the tracker saw output expand during July, which was one more than in June, while more sectors also saw demand increase.
Price rises
Elsewhere, food and drink manufacturers raised their prices at the fastest rate of any sector and more than the month before – 56.5 in July compared to 50.4 in June.
This came amid widespread inflationary pressures within the manufacturing industry, influenced by higher shipping and staff costs.
For only the second time since 2022, July saw all seven manufacturing sectors monitored by the tracker record cost rise. Meanwhile, the measure of cost inflation across manufacturing reached its highest level since January 2023.
Commenting on the latest figures, head of market insights at Lloyds Bank, Jeavon Lolay, said that the model accurately depicts the strength of demand in the UK.
“Food and drink manufacturers led the way in July [and] the manufacturing sector as a whole continued to perform well,” Lolay continued.
“Rising price pressures are another key feature in this latest tracker, with all seven manufacturing sub-sectors reporting they are increasingly charging higher prices– only the second time this has happened since 2022. This highlights that while attention has shifted to more domestically generated services inflation, developments in the goods-producing sector cannot be ignored when considering the future path of UK inflation.”
Meanwhile, Dave Atkinson, UK Head of Manufacturing at Lloyds Bank, added: “The food and drink manufacturing sector has recently faced sharp and sustained cost pressures. Although the data currently indicates that many firms are able to absorb this, they may be considering how sustainable it is in the long term.
“Balancing pricing strategy while having a competitive edge will be the aim of many businesses as they closely manage working capital to ensure that they can maintain financial resilience.”
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