- Prior 53.7
- Composite PMI 50.8 vs 50.7 prelim
- Prior 52.8
The headline reading is the weakest since February and signifies an extended downturn in the past few months, as growth conditions ease further in the UK. Overall business activity is near stagnation now and that will keep pressure on the BOE as they seek to tighten policy further. S&P Global notes that:
"The loss of momentum signalled by service providers in July suggests that the UK economy is set to flatline at best in the coming months as higher borrowing costs take a bigger toll on consumer spending and business confidence. Service sector companies saw the weakest rise in new work for six months, while job creation slipped as some firms responded to softer market conditions by putting the brakes on hiring.
"There were sporadic reports that subdued demand had led to more competitive pricing and the pass through of lower fuel costs, which contributed to a slowdown in output charge inflation to its second-lowest since August 2021. However, there was no let-up in pressure on business expenses as the rate of input cost inflation was virtually unchanged from that seen on average in the second quarter of 2023.
"Survey respondents widely commented on strong cost pressures due to higher salary payments in July, which will add to concerns among policymakers that sticky inflation and stagnant growth will prove a persistent challenge for the UK economy during the second half of the year."
