• Prior 52.9
• Manufacturing PMI 51.4 vs 51.3 expected
• Prior 51.2
• Composite PMI 51.7 vs 53.1 expected
• Prior 53.0

Election jitters starting to creep in? The headline reading is a 7-month low and that is weighing on the overall UK business activity for June. The only bright side is that manufacturing conditions are seen improving further, with the reading there being a 23-month high. Going back to services activity, S&P Global notes that there is some evidence that the
slowdown was partly driven by a pause in client spending
decisions ahead of the election period.

“Flash PMI survey data for June signal a slowing in the
pace of economic growth, indicating that GDP is now
growing at a sluggish quarterly rate of just over 0.1%.

“The slowdown in part reflects uncertainty around the
business environment in the lead up to the general
election, with many firms seeing a hiatus in decision
making pending clarity on various policies.

“Meanwhile, from an inflation perspective, stubbornly
persistent service sector inflation – a major barrier to lower
interest rates – remains evident in the survey, but should
at least cool further from the current 5.7% pace in coming
months. However, companies‘ costs are rising, most
notably in manufacturing, where shipping costs in
particular are spiking again and adding to a renewed rise
in inflationary pressures from goods.

“In short, while a slowdown in economic growth may prove
temporary, should businesses react positively to the
policies announced by any new government, the
stubbornness of underlying inflationary pressures above
the Bank of England’s target still looks somewhat
engrained.”

This article was written by Justin Low at www.forexlive.com.