United Kingdom: Services and manufacturing PMIs rebound in June
June 23, 2020
The IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) rose from 29.0 in May to 47.0 in June, but remained in contractionary territory. The manufacturing PMI increased from 40.7 in May to 50.1 in June, moving back above the 50-threshold separating worsening and improving operating conditions.
In the private sector as a whole, the declines in new orders and employment eased in June as lockdown measures were gradually lifted. However, margins were squeezed as firms offered discounts in an attempt to offset soft demand, at the same time as input cost pressures intensified.
Regarding the outlook for the economy, Chris Williamson, chief business economist at IHS Markit, offered a nuanced picture: "June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4th July. […] However, […] demand clearly remains weak, as indicated by a further steep decline in backlogs of orders and an ongoing fall in new orders. Many Covid-19 restrictions and social distancing measures will also need to stay in place until an effective treatment or vaccine is available, curbing demand in a variety of service sectors in particular. Uncertainty over recovery prospects and job prospects also mean demand for many goods, especially non-essential big-ticket items, is likely to remain weak for many months.”