UK’s PMI data for June presents a mixed picture. Manufacturing PMI slightly increased from 51.2 to 51.4, surpassing the expectation of 51.0 and marking a 23-month high. However, Services PMI fell from 52.9 to 51.2, below expected 53.2, reaching a 7-month low. Consequently, Composite PMI also declined from 53.0 to 51.7, hitting its lowest point in seven months.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that the Flash PMI survey data for June signals a slowdown in the pace of economic growth, with GDP now growing at a “sluggish” quarterly rate of just over 0.1%. This slowdown is partly due to uncertainty in the business environment ahead of the general election, causing many firms to pause decision-making while awaiting clarity on future policies.
From an inflation perspective, the survey highlights persistent inflation in the service sector, which remains a significant barrier to lowering interest rates. This stubborn inflation is currently at a 5.7% pace but is expected to cool further in the coming months.
In summary, while the current economic slowdown may be temporary, contingent on business reactions to new government policies, the persistent underlying inflationary pressures above BoE’s target remain a concern.
