According to the latest report released by S&P Global, the PMI was down from 52.4 in July and registered only a marginal strengthening in business conditions.

Manufacturing production continued to increase in August, but at a slower pace amid a subdued demand environment. In fact, new orders decreased following a return to growth in July, contributing to a further fall in employment amid evidence of spare capacity.

New orders decreased in August, after having risen for the first time in four months during July. Demand conditions were reportedly muted, in part due to US tariffs.

The report outlined that with new orders down, manufacturers again scaled back their workforce numbers midway through the third quarter of the year. Employment decreased for the eleventh successive month, and at a modest pace. The drop in new orders, however, meant that spare capacity remained evident in the sector.

Stocks of finished goods were also down as firms reported a reluctance to hold inventories at a time of falling new orders, and the dispatch of finished products to customers. While manufacturers reduced their staffing levels and stocks of finished goods, an increase in purchasing activity was recorded for the second month running, linked by panellists to higher output requirements and efforts to build stocks ahead of an expected improvement in demand.

Stocks of purchases fell, however, amid reports of a reduction of imports. Material scarcity also impacted efforts to secure inputs, with suppliers' delivery times lengthening solidly. Experts pointed out that material shortages, tariffs and increased transportation costs meant that input prices increased again in August.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said "While it was positive to see output expand again during August, a renewed fall in new orders calls into question how long firms will be able to keep increasing production. The drop in new sales was led by exports, which decreased solidly again as issues around tariffs continued to impact the sector.

"Firms were at least more confident in the year ahead outlook, in part based on hopes of a pick-up in demand, which encouraged a rise in purchasing activity. Manufacturers were hampered to some extent by material shortages, however. With the path ahead for tariffs seeming more stable now, the predicted improvements in demand will hopefully materialise in the months ahead, helping to maintain production growth in the sector", he noted.