The UK economy showed signs of losing momentum in July, with Composite PMI falling from 52.0 to 51.0. A modest rise in Manufacturing PMI to 48.2 from 47.7 failed to offset a sharp slowdown in services activity, which dropped from 52.8 to 51.2. Overall, the data point to a fragile expansion at the start of Q3.
Chris Williamson at S&P Global Market Intelligence warned that output growth is now consistent with just a 0.1% quarterly GDP gain, and that “risks are tilted to the downside.” Persistent job shedding across sectors underscores the underlying weakness, raising concerns about near-term demand conditions.
With growth stalling and the labor market softening, Williamson said that will add pressure to the BoE to deliver another rate cut in August. While recent inflation data surprised to the upside, the BoE could “look through” those pressures and prioritize support for a struggling economy.
