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The UK's private sector remained in expansion territory in July, preliminary figures on Friday showed, though growth was the slowest since February 2021.
The latest S&P Global composite flash purchasing managers' index fell to 52.8 points in July from June's final tally of 53.7. July's figure remained above the 50.0 no change mark but set a 17-month low.
‘Business activity at UK private sector companies increased for the seventeenth month running in July, but the rate of expansion was the weakest over this period. The slowdown in output growth mostly reflected softer demand, alongside ongoing capacity constraints arising from shortages of materials and staff,’ S&P Global commented.
The composite figure is calculated using a weighted average of services and manufacturing PMIs.
Growth in both sectors slowed to multi-month lows.
The flash services PMI weakened to 53.3 points in July from 54.3 in June, the lowest figure in 17 months.
Growth in the manufacturing sector tumbled to a 25-month low. The flash PMI figure came in at 52.2 points in July, down from 52.8 in June.
‘On a more positive note, latest data indicated that input cost inflation eased considerably since June and was the lowest for ten months. Survey respondents often commented on lower commodity prices and a stabilisation in fuel costs, but there were still widespread reports citing intense salary pressures. Some firms noted that exchange rate depreciation against the US dollar had added to their purchasing costs during July,’ S&P Global said.
Private sector input costs grew at the slowest rate since September 2021, helped by a ‘marked’ ebbing of cost pressures in manufacturing.
S&P added: ‘Mirroring the trend for input costs, July data pointed to a further slowdown in prices charged inflation at private sector companies. The latest rise in output charges was the least marked since January, reflecting some efforts to moderate price increases in the wake of softer customer demand.’
Private sector firms are sporting a ‘relatively cautious’ outlook. Confidence improved from June's 25-month low, however.
Final manufacturing PMI figures are reported on August 1, with composite and services numbers released together two days later.
The PMI survey features a panel of 650 manufacturers and 650 services firms. The flash data was calculated using 80% to 90% of the responses.
The pound got a slight boost following the data, rising to $1.1953 shortly afterwards from around $1.1930 just beforehand.
While the UK's private sector clung onto growth, the eurozone suffered a decline. The flash composite PMI there fell to 49.4 points in July from June's final tally of 52.0.
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