UK Economy Picks Up Pace in June as Manufacturing Rebounds

The UK private sector returned to modest growth in June, rounding off the second quarter on a more positive note.

According to the latest flash PMI data, manufacturing output rose at one of its strongest rates since the pandemic, helping offset a noticeable slowdown in services.

June Flash PMI Highlights:

• Composite Output Index: 50.7 (May: 50.3), highest in 3 months
• Services Business Activity Index: 51.2 (May: 52.9), lowest in 3 months
• Manufacturing Output Index: 47.0 (May: 46.4), best in 4 months
• Manufacturing PMI: 51.4 (May: 51.7), slightly lower but still signaling growth

While the uptick in manufacturing breathed some life back into the economy, demand conditions remained fragile. New orders declined for a second straight month, though the pace of contraction eased.

Inflation Eases, But Confidence Slips

There was a silver lining on the inflation front. Input cost inflation fell to its lowest level since early 2020, and output prices rose at their slowest pace in four years, a welcome sign for the Bank of England as it monitors inflation risks.

However, business sentiment took a hit. Confidence about the year ahead dropped to a six-month low, reflecting ongoing caution amid weak demand and policy uncertainty.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented:

“The UK economy started Q2 on shaky ground but found some stability in June. Manufacturing output rebounded strongly, but the services sector lost steam. Overall growth remains fragile.”

“With new orders still falling and confidence weakening, businesses remain cautious. But easing price pressures could help ease concerns at the Bank of England.”

Source: S&P Global