UK flash composite PMI rose to 52.1 in July, its highest in three months, as manufacturing output hit a 22-month high. Services also returned to growth. Easing price pressures reduce immediate pressure on the BOE to tighten further.
Alpha Score of 51 reflects moderate overall profile with moderate momentum, moderate value, moderate quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
UK private-sector activity returned to growth in July, with the Flash Composite PMI climbing to 52.1 from 49.3, its highest reading in three months. S&P Global, which compiles the survey, said both manufacturing and services improved, marking the first expansion in overall business activity since April.
Manufacturing led the upturn. The Manufacturing Output Index rose to 53.6 from 52.6, a 22-month high, while the Manufacturing PMI edged up to 52.8. Services also returned to expansion, with the Business Activity Index reaching 51.8 from 48.8, helped by warm weather and stronger domestic tourism. S&P Global noted the services recovery remained relatively subdued as cost-of-living pressures continued to weigh on household spending, and part of the manufacturing strength reflected precautionary inventory building linked to supply chain disruptions in the Middle East.
Price pressures showed signs of easing. Lower oil prices during the first half of July helped moderate input costs, S&P Global said, reducing immediate pressure on the Bank of England to tighten policy further. Inflation stayed elevated, however, due to the broader energy shock and supply constraints. Businesses continued to reduce headcount as higher costs weighed on hiring.
Business confidence improved during the survey period as geopolitical tensions temporarily eased, S&P Global said. The firm cautioned that renewed instability in the Middle East and rising oil prices could challenge both the inflation outlook and the durability of the recovery.
The data supports the case for the Bank of England to hold rates steady at its next meeting, traders said. The GBP/USD profile remains sensitive to shifts in rate expectations.
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