UK private sector expands as new business growth accelerates

24th Jul 2024 10:19

(Sharecast News) - Private-sector activity in the UK has expanded for the ninth straight month, with new business growth at its highest level in more than a year, according to the composite purchasing managers' index (PMI) released on Wednesday by S&P Global.

The S&P Global UK composite PMI increased to 52.7 in July, up from 52.3 in May and marginally ahead of the consensus forecast of 52.6.

The headline index hasn't dipped below the neutral 50-point level which separates expansion and contraction since October.

Activity in the manufacturing sector picked up more than expected, with the PMI rising from 50.9 to 51.8 - its highest since February 2022 - while the services PMI increased from 52.1 to 52.4.

Sales growth across both manufacturing and services sectors accelerated this month, with total new business increasing at its fastest pace since April 2023.

Meanwhile, firms increased their staffing numbers at the quickest pace in 13 months, with job numbers at manufacturing firms holding steady in July, ending a 21 months of declines.

Helping matters was the slowest rate of price growth in nearly three and a half years, driven by a softer increase in output charges at services companies. However, inflation is still high by historical standards and there are signs that inflationary pressures are moving away from services to manufacturing, with delays in Red Sea shipping and higher freight costs.

Chris Williamson, the chief business economist at S&P Global Market Intelligence, said July's figures "signal an encouraging start to the second half of the year".

He said that easing price pressures further raise the prospect of an interest-rate cut by the Bank of England this summer, but "policymakers will likely take a cautious approach to loosing policy" amid rising manufacturing prices and salary inflation.