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The UK private sector saw a considerable slowdown in growth in July, according to initial survey results from S&P Global on Monday, falling to its weakest level in six months.
The headline seasonally adjusted S&P Global flash UK composite output index fell to 50.7 in July from 52.8 in June. Though remaining above the crucial 50.0 no-change mark which separates growth from contraction, July’s reading was the lowest since January.
The print also came well below FXStreet-cited consensus, which expected the composite PMI to dip only to 52.4.
S&P Global said survey respondents commented on headwinds to business activity from rising interest rates, elevated inflation, and more caution among clients due to an uncertain economic outlook.
The flash manufacturing output index fell for the fifth successive month to 46.5 in July from 48.1 in June. Meanwhile, the flash services PMI business activity index dropped to 51.5 from 53.7 last month.
Both the flash manufacturing and services PMI prints fell below market expectations.
‘The UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries,’ said Chris Williamson, chief business economist at S&P Global Market Intelligence.
‘July’s flash PMI survey data revealed a deepening manufacturing downturn accompanied by a further cooling of the recent resurgence of growth in the service sector. Rising interest rates and the higher cost of living appear to be taking an increased toll on households, dampening a post-pandemic rebound in spending on leisure activities. Meanwhile, manufacturers are cutting production in response to a worryingly severe downturn in orders, both from domestic and export markets.’
The S&P Global flash UK composite PMI is compiled by S&P Global from responses to questionnaires sent to survey panels of around 650 manufacturers and 650 service providers.
Flash data is calculated from around 80% to 90% of total responses and is intended to provide an early indication of the final data. Data is collected between July 12 to 20.
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