The S&P Global/CIPS Flash Composite Purchasing Managers’ Index (PMI) remained unchanged at 53.1 in May into June. As such, the index remained above the no-change threshold of 50.0, indicating a continued improvement in business conditions from the previous month. In the private sector as a whole, output growth remained at a 15-month low in May, while growth in new orders slowed for the fourth month in a row and business sentiment fell on inflation worries.
The Manufacturing PMI stood at 53.4 in June, down from 54.6 in May, which was held back by weak demand and ongoing supply problems. Meanwhile, the services PMI activity index remained stable at 53.4 in May into June. The services sector continued to outperform manufacturing due to the recovery of contact-intensive services as the impact of the pandemic wanes. However, high inflation held back activity in the service sector.
Chris Williamson, chief economist at S&P Global, commented:
“The economy is starting to look like it’s running from scratch. The current business growth is supported by orders placed in previous months as companies report an almost complete drop in demand. Manufacturers in particular are grappling with falling orders, especially for exports, and services are already showing signs that the recent surge in growth due to unmet pandemic demand has been reversed as the cost of living rises.”
FocusEconomics expects the economy to grow by 3.7% in 2022, 0.1 percentage point below last month’s forecast, and grow by 1.5% in 2023.