UK private sector output growth hits five-year high as reopening gathers momentum in July

According to the latest PMI bulletin…“July data indicated a marked improvement in business conditions across the UK private sector economy following the easing of lockdown measures to contain the spread of the coronavirus disease 2019 (COVID-19). The latest survey indicated a return to growth for the service sector and a much faster rise in manufacturing production than seen in June.

At 57.1 in July, up from 47.7 in June, the headline seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – registered above the 50.0 no-change value for the first time since February. Moreover, the index has now risen for three months running after hitting a survey-record low of 13.8 in April. The July expansion was the fastest recorded since June 2015.

Survey respondents commented on a gradual increase in business activity following the lockdown period during the second quarter of 2020, helped by returns to work and a phased reopening of the wider UK economy. There were also some reports that clients had started to take a more long-term view when considering their spending plans. 

However, service providers often noted that business capacity remained limited and operating costs had risen due to COVID-19 mitigation efforts, while those in the manufacturing sector also commented on the likelihood of a slow return to output levels seen prior to the pandemic.” 

Chris Williamson, Chief Business Economist at IHS Markit, and Duncan Brock, Group Director at CIPS discuss the latest Markit results...See the latest IHS Markit / CIPS Flash UK Composite PMI®