The growth rate of the UK’s private sector has reached its lowest level in six months, a key survey suggests, pointing to the impact of escalating interest rates.
The flash UK purchasing managers’ index (PMI) by S&P Global/CIPS dropped to a mere 50.7 in July, down from 52.8 in the previous month.
This figure falls below the projected 52.3 for July and just above the critical 50 threshold, indicating sector expansion.
These statistics suggest a potential deceleration in the UK’s economy in the coming months following the most rapid sequence of interest rate hikes in 30 years by the Bank of England.
Following the release of these data, the British pound depreciated by 0.2pc, while the cost of government borrowing reduced, with the yield on 10-year gilts declining almost nine basis points to 4.18pc.
Market participants and economists predict a 0.25 point increase in interest rates to 5.25pc on August 3, as opposed to another half-point surge.
According to Chris Williamson, the Chief Business Economist at S&P Global Market Intelligence, “The UK economy was on the verge of stagnation in July, and coupled with pessimistic future indicators, the threat of recession has resurfaced.
The PMI data for July revealed a worsening manufacturing recession along with a continued deceleration in the recently rejuvenated growth in the service sector.”
