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The latest data from S&P Global on Thursday indicated that growth in June in the UK remained at the 15-month low seen in May.
The June flash UK composite output index was unchanged from the 53.1-point reading in May, posting just above the neutral 50 value for the sixteenth consecutive month and much weaker than the 58.3 average seen in the first quarter of the year.
Manufacturing PMI hit a 23-month low, falling to 53.4 points from 54.6, while the services PMI remained at 53.4 points. A sustained recovery in events and other areas of face-to-face consumer spending held to boost business activity in the service economy.
Demand remained subdued in June, with new order growth slowing for the fourth month in a row and to a greater extent than seen in May. Firms cited hesitancy amongst clients and squeezed budgets due to rising inflation as key factors in holding back demand.
‘The economy is starting to look like it is running on empty. Current business growth is being supported by orders placed in prior months as companies report a near-stalling of demand,’ commented Chris Williamson, chief business economist at S&P Global Market Intelligence.
‘Manufacturers in particular are struggling with falling orders, especially for exports, and the service sector is already seeing signs of the recent growth spurt from pent-up pandemic demand move into reverse amid the rising cost of living,’ he continued.
Business expectations fell by 4.6 points in June, the largest monthly decline since the start of the pandemic with both manufacturers and service providers reporting the lowest degree of business optimism since May 2020.
‘The economic uncertainty brought about by war disruptions, the cost of living crisis, and China's zero Covid-19 policy, have all damped business optimism to its lowest point since the start of the pandemic,’ said Duncan Brock, group director at CIPS.
Williamson suggested that the survey data indicated the rate of inflation will remain ‘historically high for some time to come’, adding that the UK looks set for a ‘troubling combination of recession and elevated inflation as we move into the second half of the year’.
The PMI reading is based on a survey sent to 650 manufacturers and 650 service providers. Responses were collected between June 13 to June 21. Flash readings are calculated from around 80% to 90% of total responses.
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