Economic Buzz: UK Private Sector Grows Weakly In July

22 Jul 2022 , 03:52 PM

Business activity at UK private sector companies increased for the seventeenth month running in July, but the rate of expansion was the weakest over this period. The slowdown in output growth mostly reflected softer demand, alongside ongoing capacity constraints arising from shortages of materials and staff. The headline seasonally adjusted S&P Global / CIPS Flash UK Composite Output Index registered 52.8 in July, down from 53.7 in June and the lowest reading since February 2021. Any figure above 50.0 indicates an overall expansion of private sector business activity. Sector data illustrated that service providers continued to outperform in July (index at 53.3), although the latest output expansion was the weakest for 17 months. Meanwhile, manufacturing production (49.7) decreased for the first time since May 2020. New order volumes across the UK private sector as a whole increased moderately in July, driven by a sustained rise in new work across the service economy. July data indicated a solid rise in private sector employment, despite the pace of job creation easing to a 16-month low. Higher levels of employment were driven by efforts to reduce backlogs and rebuild business capacity after cutbacks during the pandemic. Input cost inflation moderated for the second month running, with the seasonally adjusted index dropping from 84.5 in June to 78.3 in July. This signaled the slowest rate of inflation since September 2021. Mirroring the trend for input costs, July data pointed to a further slowdown in prices charged inflation at private sector companies. Powered by Commodity Insights