Prior 52.8Manufacturing PMI 48.2 vs 48.0 expectedPrior 47.7Composite PMI 51.0 vs 51.8 expectedPrior 52.0
That’s a bummer as the recovery in the UK services sector loses momentum in July. Output growth is seen slowing, albeit marginally, as a decline in new work is also noted on the month. The more pressing point for the BOE is perhaps that the overall rate of input price inflation is seen accelerating from June’s six-month low. Price troubles continuing to persist? However, the weaker jobs situation from the report will keep the BOE on track to cut rates in August at least. S&P Global notes that:
“The flash UK PMI survey for July shows the economy
struggling to expand as we move into the second half of
the year. Output growth weakened to a pace indicative of
the economy growing at a mere 0.1% quarterly rate, with
risks tilted to the downside in the coming months.
“The sluggish output growth reported in July reflected
headwinds of deteriorating order books, subdued
business confidence and rising costs, all of which were
widely linked to the ongoing impact of the policy changes
announced in last autumn’s Budget and the broader
destabilising effect of geopolitical uncertainty.
“Particularly worrying is the sustained impact of the
Budget measures on employment. Higher staffing
costs have exacerbated firms’ existing concerns over
payroll numbers in the current environment of weak
demand, resulting in another month of sharply reduced
headcounts in July.
“The weak growth trajectory and sustained culling of
jobs will add to pressure on the Bank of England to
cut rates again at its next policy meeting in August. It
seems likely that the disappointing growth and labour
market trends will increasingly dominate the inflation
forecasting narrative, encouraging policymakers to ‘look
through’ the recent rise in price pressures and instead
focus on helping to revive growth.”
This article was written by Justin Low at investinglive.com.