Latest data released by Markit/CIPS – 23 July 2021
- Prior 62.4
- Manufacturing PMI 60.4 vs 62.5 expected
- Prior 63.9
- Composite PMI 57.7
- Prior 62.2
UK business activity miss on expectations and decline quite considerably from June as firms widely report that staff and raw materials shortages dampened conditions, hindering the recovery pace after the reopening in April.
This is certainly a spot to watch now for the UK and will likely dampen any hopes of a more hawkish tilt by the BOE as we look towards the August meeting.
Markit notes that:
“July saw the UK economy’s recent growth spurt stifled by
the rising wave of virus infections, which subdued customer
demand, disrupted supply chains and caused widespread
staff shortages, and also cast a darkening shadow over the
outlook.“Although business activity continued to grow, aided by
the easing of lockdown restrictions to the lowest since the
pandemic began, the rate of expansion slowed sharply to the
weakest since March.“Transport, hospitality and other consumer-facing services
companies were the hardest hit, though manufacturing also
saw growth weaken markedly during the month.“Although the July flash survey only covered three days of the
full easing of covid restrictions, any imminent re-acceleration
of growth in August looks unlikely due to a steep slowing in
overall new order growth recorded during July.“Concerns over the Delta variant have meanwhile
overshadowed the passing of “freedom day”, and were a key
factor alongside Brexit and rising costs behind a sharp slide in
business expectations for the year ahead, which slumped to
the lowest since last October.“The PMI indicates that GDP growth will likely have slowed
in the third quarter, after having rebounded sharply in the
second quarter.“Firms’ costs rose at a rate unprecedented in over 20 years
of survey history as supply shortages pushed up the price of
goods, suppliers of services hiked prices and employee pay
continued to rise.”