S&P Global Flash United Kingdom PMI®
Flash UK PMI Composite Output Index(1) at 51.7 (May: 53.0). 7-month low.
Flash UK Services PMI Business Activity Index(2) at 51.2 (May: 52.9). 7-month low.
Flash UK Manufacturing Output Index(3) at 54.2 (May: 53.4). 26-month high.
Flash UK Manufacturing PMI(4) at 51.4 (May: 51.2). 23-month high.
UK private sector business activity expanded in June at its slowest rate since last November, as a slowing of service sector growth offset a stronger performance in manufacturing. Output at goods producers rose to the greatest degree since April 2022, driven by improved order book intakes and strong business confidence. At the same time, services activity grew at its softest pace for seven months, although survey evidence indicated that the slowdown was partly driven by a pause in client spending decisions during the election period.
UK firms also faced a quickening of input cost inflation in June, as severe global shipping constraints led to higher transport costs. The rise fed through to quicker increases in output charges among both manufacturing and services companies, with producers notably raising their prices at the sharpest rate since May 2023.
The headline seasonally adjusted S&P Global Flash UK PMI Composite Output Index fell from 53.0 in May to 51.7 in June, signalling a slower and modest increase in business activity at the end of the second quarter of the year. Furthermore, the expansion was the softest recorded since November 2023.
Services firms experienced a loss of growth momentum for the second month running in June, with business activity rising only modestly and at the weakest pace for seven months. Although higher customer demand helped to boost activity levels, according to respondents, this was partly offset by reports of spending decisions being put on hold due to the general election.
At the same time, manufacturers registered the sharpest rise in production levels for over two years, building on a renewed upturn in output in May amid sustained growth of new order volumes. Some companies also highlighted efforts to increase capacity and catch up on backlogs in the expectation that demand will continue to improve and support output.
UK companies recorded a moderate uptick in new business in June, with the pace of growth unchanged and the joint-lowest in the current seven-month sequence of expansion. Again, services and manufacturing firms were alike in registering only a modest upturn, although the latter’s increase was the strongest observed since April 2022. A dip in foreign demand for manufactured goods meant that overall new export orders decreased fractionally in June, thereby ending a two-month period of marginal gains. This came despite a further uplift in new export business at service providers.
Employment across the UK private sector remained on an upward trajectory in June, having increased in every month of 2024 so far. However, there was further evidence that hiring difficulties and efforts to save costs led to another subdued rate of job creation, with the rise in employment even softening from May to a fractional pace. Services and manufacturing continued to differ in their hiring trends, with a slight increase in jobs among service providers contrasting with a modest decline at goods producers.
Inflationary pressures were back on the rise during June, as companies widely reported a steep increase in transport costs linked to global shipping bottlenecks. Input price inflation accelerated from its 40-month low in May, amid stronger cost increases across both key sectors. Notably, manufacturing input prices recorded the sharpest uptick for 17 months, with firms also commenting on higher prices for items such as metals and paper. Wages remained the main driver of services cost inflation, although shipping and software costs were also widely cited by respondents.
Prices charged inflation across the private sector consequently rose to a four-month high in June, as both manufacturing and services firms raised their selling prices to a faster degree than in the previous survey period. The uptick in services charge inflation was the first recorded since February, with firms generally highlighting the need to cover their costs via increased selling prices. Factory gate prices rose solidly and to the greatest extent since May 2023.
Finally, the flash survey data pointed to a weaker level of business confidence regarding future output at UK companies in June, which qualitative evidence showed was fuelled by political uncertainty ahead of the general election. Sentiment at services firms was especially affected, dropping to its lowest level for seven months. Aside from this, optimism towards future activity was still robust overall, with firms generally expectant of improving economic conditions, customer growth and new products driving increased output over the coming year.
Source: S&P – Global Flash United Kingdom PMI®
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