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EsUK Private Sector Rebounds in July as Factories Lead PMI
UK Composite PMI rose to 52.1 in July, above 49.7 expected; manufacturing at 52.8 led gains, S&P Global data show.
UK business activity returned to growth in July, S&P Global’s PMI survey showed. The Composite PMI rose to 52.1 from 49.3 in June, above the 49.7 consensus. Manufacturing climbed to 52.8 from 48.8, exceeding the 52.0 estimate and moving ahead of services. Readings above 50 indicate expansion.
Chris Williamson, chief business economist at S&P Global Market Intelligence: "UK businesses reported stronger activity in July, pointing to a faster pace of economic growth at the start of the third quarter." He highlighted leisure demand: "Hospitality companies saw demand boosted by good weather, the FIFA World Cup and more domestic holidays, as high costs and uncertainty continued to deter some foreign travel. However, overall services growth remained lacklustre amid cost-of-living pressures."
Manufacturing gained ground on firmer export orders and stockpiling. Williamson noted: "Unusually for recent years, manufacturing is now growing faster than services, buoyed by rising exports." He added a caveat: "Manufacturers and their customers continued to build precautionary stocks, widely linked to supply chain disruption caused by the war in the Middle East, meaning part of the recent factory upturn could prove short-lived."
Price pressures cooled in July, reinforcing the recent signs that UK inflation is slowing and potentially strengthening the case for the Bank of England to keep rates unchanged. Williamson reported: "Price pressures cooled thanks to the lower oil prices seen during the first half of the month, which could strengthen speculation that the Bank of England will hold off raising interest rates." He cautioned that "inflationary pressures clearly remain elevated, as the ongoing energy shock and supply squeeze from the war in the Middle East continues to add to existing business cost pressures from earlier government policies."
Staffing levels fell again, the survey indicated. Williamson explained: "These higher costs led to a further fall in employment, which has declined continuously since the Autumn 2024 Budget."
Sentiment improved during the survey window. Williamson said: "Business optimism about the year ahead improved, reflecting some relief at reduced geopolitical tensions during the survey period and the associated drop in oil prices." He added: "With Middle East worries flaring up again in recent days, a sustained cooling in the price data and upturn in business confidence is by no means assured."
