Private sector activity in the U.K. expanded at a solid and faster rate in July, supported by the sharpest upturn in new business growth in 15 months and a strengthening of business confidence after a dip in June. The service sector’s activity growth accelerated slightly while manufacturing output rose to the strongest degree since February 2022.
This growth in the U.K.’s business landscape has encouraged firms to increase their staffing numbers at the quickest pace for 13 months, while future activity expectations came close to matching February’s two-year peak.
The headline seasonally adjusted S&P Global Flash UK PMI Composite Output Index rose from 52.3 in June to 52.7 in July, signaling a solid upturn in private sector activity. The index has reported an expansion for the past nine months, averaging 53.0 in 2024 so far.
Manufacturing sector signals recovery
Once again, the U.K. manufacturing sector posted a sharper increase in business activity. Production levels rose for the 3rd month running following a lengthy downturn. Companies mainly increased output due to stronger order book volumes while also maintaining efforts to reduce outstanding workloads.
In the service sector, activity grew slightly faster in July, supported by a much faster increase in new work compared to June. That said, the pace of activity expansion was still among the softest recorded in 2024 to date.
Sales growth across both the U.K.’s manufacturing and services accelerated in July, leading to the strongest increase in total new business growth since April 2023. In addition, demand from overseas also improved, with firms indicating the fastest rise in new export orders in 16 months.
“The first post-election business survey paints a welcoming picture for the new government, with companies operating across manufacturing and services, having gained optimism about the future, reporting a renewed surge in demand and taking on staff in greater numbers,” stated Chris Williamson, chief business economist at S&P Global Market Intelligence.
Employment growth strengthens
The latest survey data also revealed that employment growth across the U.K. strengthened at the start of the third quarter, as staffing numbers rose at the fastest rate in just over a year.
The report attributed recruitment at services firms to a greater rise in demand, outweighing some mentions of redundancies and budget cuts. Notably, job numbers at manufacturing firms were stable in July, ending a 21-month sequence of decline.
Read: Euro area government debt rises to 88.7 percent of GDP in Q1 2024
Price inflation slows
As the U.K. sees a resurgence in business growth, price inflation slowed to its weakest since February 2021 in July due to a softer increase in output charges at services companies. However, the rate of inflation was still above its long-run trend as firms continued to pass on higher expenses to their customers.
After slipping to a six-month low in June, business confidence across the U.K. rebounded in July and was only slightly below the two-year high of February. Manufacturing and services firms saw similar prospects, expressing optimism towards future business activity as demand improves, investments rise, and interest rate cuts near.
For more economy news, click here.
