United Kingdom: Composite PMI remains elevated in June, pointing to extremely strong Q2 GDP outturn
The IHS Markit/CIPS Composite Purchasing Managers’ Index (PMI) dipped from 62.0 in May to 61.7 in June. However, the index remained far above the 50-threshold, signaling a rapid improvement in business conditions.
Both the manufacturing and services PMIs dipped slightly amid marginally softer new orders growth. That said, the overall demand picture was still positive amid easing Covid-19 restrictions, which led firms to increase employment at a record pace. Meanwhile, supply chain pressures saw input cost inflation rise to the joint-highest level ever observed, leading to record output price inflation.
On the implications of June’s reading, Chris Williamson, chief business economist at IHS Markit, commented:
“Businesses are reporting an ongoing surge in demand in June as the economy reopens, led by the hospitality sector, meaning the second quarter looks to have seen economic growth rebound very sharply from the first quarter’s decline. There are some signs that the rate of expansion appears to have peaked, as both output and new order growth cooled slightly from May’s record performances, but full order books and a further loosening of virus-fighting restrictions should nevertheless help ensure growth remains strong as we head through the summer.”