- Prior 55.2
- Manufacturing PMI 46.2 vs 46.8 expected
- Prior 47.1
- Composite PMI 52.8 vs 53.6 expected
- Prior 54.0
Similar to the euro area, the UK economy also showed signs of slowing towards the end of Q2 but is at least still posting slight growth. The manufacturing sector continues to underperform while activity in the services sector is also dampened by rising price pressures, which marks a contrast seen in the former. S&P Global notes that:
“June’s flash PMI survey indicates that the UK economy
has lost momentum again after a brief growth spurt in the
spring, and looks set to weaken further in the months
ahead.
“Most notably, consumer spending on services, which was
a core growth driver in the spring, is now showing signs of
faltering as the reality of higher interest rates, the
increased cost of living and gloom about the outlook sets
in and overrides the brief boost to spending enjoyed from the pandemic tailwind. The manufacturing sector
meanwhile continues to report recessionary conditions.
“One notable area of resilience in the economy is the
labour market, with jobs growth accelerating in June as
companies in the service sector continue to fill vacancies.
While falling backlogs of work suggest this hiring trend
could also fade in the coming months as the economy
weakens, for now it is generating higher wage growth, in
turn feeding through to still-elevated inflation pressures in
the service sector. As such, the survey’s price gauges
point to consumer price inflation remaining well above the
Bank of England’s target into 2024, which will add to the
case for further interest rate hikes.
“Thus, while the June survey reveals the economy to be
cooling as a result of higher interest rates, the stubbornly
elevated price growth in the service sector suggests the
Bank of England will consider its fight against inflation as
still a work in progress. However, such rate hikes will
clearly add further to the likelihood of a recession later in
the year, which is looking increasingly inevitable as
collateral damage in the fight against inflation.”