• Prior 52.8
• Manufacturing PMI 48.2 vs 48.0 expected
• Prior 47.7
• Composite PMI 51.0 vs 51.8 expected
• Prior 52.0

That’s a bummer as the recovery in the UK services sector loses momentum in July. Output growth is seen slowing, albeit marginally, as a decline in new work is also noted on the month. The more pressing point for the BOE is perhaps that the overall rate of input price inflation is seen accelerating from June’s six-month low. Price troubles continuing to persist? However, the weaker jobs situation from the report will keep the BOE on track to cut rates in August at least. S&P Global notes that:

“The flash UK PMI survey for July shows the economy struggling to expand as we move into the second half of the year. Output growth weakened to a pace indicative of the economy growing at a mere 0.1% quarterly rate, with risks tilted to the downside in the coming months.

“The sluggish output growth reported in July reflected headwinds of deteriorating order books, subdued business confidence and rising costs, all of which were widely linked to the ongoing impact of the policy changes announced in last autumn’s Budget and the broader destabilising effect of geopolitical uncertainty.

“Particularly worrying is the sustained impact of the Budget measures on employment. Higher staffing costs have exacerbated firms’ existing concerns over payroll numbers in the current environment of weak demand, resulting in another month of sharply reduced headcounts in July.

“The weak growth trajectory and sustained culling of jobs will add to pressure on the Bank of England to cut rates again at its next policy meeting in August. It seems likely that the disappointing growth and labour market trends will increasingly dominate the inflation forecasting narrative, encouraging policymakers to ‘look through’ the recent rise in price pressures and instead focus on helping to revive growth.”

This article was written by Justin Low at investinglive.com.