According to the preliminary report from S&P Global/CIPS, in June, activity in the UK private sector did not change compared to May, as the stabilization of activity in the service sector was offset by a drop in activity in the manufacturing sector. However, the optimism of private sector companies continued to decline in June and reached its lowest level in just over 2 years.
The UK Composite Output Index was 53.1 points in June, which corresponded to the value for May. Despite the fact that the index remains in the territory of expansion (above the 50 mark), the last value was the lowest in 16 months. The index of activity in the services sector remained at 53.4 points in June, while the manufacturing PMI fell to 53.4 points from 54.6 points in May. Economists had expected the indices to decline to 53.0 points and 53.7 points, respectively.
The data also showed that the index of new orders in the private sector fell to 50.8 points from 53.8 points in May, and reached the lowest level since March 2021. Meanwhile, the index of new orders in the manufacturing sector fell to the lowest level in 2 years. However, the latest survey showed a steady and accelerated growth in the number of employees: the pace of job creation reached a 3-month high, which was mainly facilitated by an increase in employment in the service sector.
As for the inflationary situation, resource prices grew somewhat slower than in May, but the growth rate was the second since the start of reporting in January 1998. Exceptionally strong cost pressures resulted in a steep increase in average prices charged in June. The rate of output charge inflation eased to its lowest since February, but remained higher than at any other time in the past two decades.
Meanwhile, the index of business expectations for the coming year fell by 4.6 points in June, recording the largest decline since the beginning of the pandemic. Both manufacturers and service providers reported the lowest level of business optimism since May 2020.