The latest survey from S&P Global/CIPS showed that business activity in the private sector continued to decline in June, and reached a 7-month low, as a slowing of service sector growth offset a stronger performance in manufacturing.
The UK composite PMI fell to 51.7 points from 53.0 points in May. Consensus estimates suggested an increase to 53.1 points. But the index remains above the 50-point mark, which indicates an expansion of activity in the private sector, for the eighth month in a row. The services PMI dropped to 51.2 points (7-month low) from 52.9 points in May, while the manufacturing PMI rose to 51.4 points (23-month high) from 51.2 points. Economists had expected the services PMI to rise to 53.0 points and the manufacturing PMI to reach 51.3 points.
Data showed that new orders in the private sector rose again in June, with the pace of growth unchanged and the joint-lowest in the current seven-month sequence of expansion. Private sector employment continued to grow in June, but the rise in employment even softened from May to a fractional pace. As for the inflationary situation in the private sector, input price inflation accelerated from its 40-month low in May, amid stronger cost increases across both key sectors. Prices charged inflation rose to a 4-month high, as both manufacturing and services firms raised their selling prices to a faster degree than in May. The data also pointed to a weaker level of business confidence regarding future output at UK companies in June, which was fueled by political uncertainty ahead of the general election.
“Flash PMI survey data for June signal a slowing in the pace of economic growth, indicating that GDP is now growing at a sluggish quarterly rate of just over 0.1%. The slowdown in part reflects uncertainty around the business environment in the lead up to the general election, with many firms seeing a hiatus in decision making pending clarity on various policies," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.