The downturn in UK factory production eased further as the sector delivered its strongest performance for five months, according to new figures.
However, firms still cited weak demand amid uncertainty over Government policy, tariffs and the wider global economy.
The S&P Global UK manufacturing PMI survey, watched closely by economists, showed a reading of 47.7 in June, up from 46.4 in May.
Any reading above 50 indicates that activity is growing while any score below means it is contracting.
This was in line with predictions by economists.
The survey pointed to a steadying situation for businesses, who said they were also increasingly optimistic.
Rob Dobson, director at S&P Global Market Intelligence, said: “Although the downturn in UK manufacturing continued in June, the latest PMI survey provides signs of conditions stabilising.
“Production, new orders and employment all fell at slower rates, while business optimism picked up to a four-month high.
“That said, any hoped-for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects.”
The data showed that UK manufacturing production contracted for the eighth consecutive month as the companies referenced weak market conditions.
New orders were also lower for the month, although this drop was the smallest over the past nine months.
Firms reported that new export business dropped for the 41st month in a row in the face of “reduced demand from the US, Europe and China”.
Mike Thornton, head of industrials at RSM UK, said: “The manufacturing PMI increased for the second consecutive month in June, showing signs of improvement across the board.
“The new orders index saw the most notable monthly uptick, rising to the highest level since October 2024, which is contributing to growing industry optimism, a trend that’s likely to continue following this week’s trade deal between the US and UK coming into force.”
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