UK PMI July 2022

The S&P Global/CIPS Flash Composite Purchasing Managers’ Index (PMI) fell from 53.7 in June to 52.8 in July. As such, the index remained above the no-change threshold of 50.0, signaling a continued, albeit milder, improvement in business conditions from the previous month.

The lower reading was driven by weaker manufacturing and services PMIs. In the private sector as a whole, business activity grew at the weakest pace in 17 months in July, constrained by moderate demand and a shortage of workers and materials. Employment growth also slowed down. Growth in new orders was moderate in the private sector as a whole, but declined in the manufacturing sector. Meanwhile, input cost inflation has eased since June on the back of declining commodity prices, leading to lower product price inflation.

Chris Williamson, chief economist at S&P Global, commented:

“Growth in the UK slowed to its lowest point in July, recording the slowest growth since the lockdown in early 2021. While no recession is yet to be seen as pent-up demand for vehicles and consumer-facing services such as travel and tourism help support growth in July, the PMI is currently at levels in line with GDP growth of just 0.2 %. Forward indicators suggest that the worst is yet to come.”

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.