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United Kingdom PMI July 2023

United Kingdom: Composite PMI falls to six-month low in July

The S&P Global/CIPS Flash Composite Purchasing Managers’ Index (PMI) came in at 50.7 in July, down from June’s 52.8. July’s result marked the worst reading since January. Consequently, the index remained above the 50.0 no-change mark, pointing to a softer improvement in private sector operating conditions from the previous month.

The Manufacturing PMI stood at 45.0 in July, down from June’s 46.5. The services PMI activity index fell to 51.5 in July (June: 53.7). Across the private sector as a whole, new orders flatlined, employment growth slowed, backlogs of work declined and new export orders fell at the fastest pace in eight months. In the manufacturing sector, there was a record improvement in delivery times, due to soft demand and the normalization of global supply chains. For services firms, a weak property market and cuts to discretionary business and consumer spending were drags on activity.

Chris Williamson, chief business economist at S&P Global, said:

“The UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries. […] Rising interest rates and the higher cost of living appear to be taking an increased toll on households, dampening a post-pandemic rebound in spending on leisure activities. Meanwhile, manufacturers are cutting production in response to a worryingly severe downturn in orders, both from domestic and export markets. Forward-looking indicators, such as order book inflows, levels of work-in-hand and future business expectations, all point to growth weakening further in the months ahead, adding to a risk of GDP falling in the third quarter.”

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