July 23, 2021
Business activity growth in the UK slowed in July, with private sector growth hitting a four-month low as shortages of staff and materials held back the recovery, according to a flash survey released on Friday.
The flash IHS/Markit composite output index – which measures activity in the services and manufacturing sectors – fell to 57.7 from 62.2 in June. This marked the lowest level reading since the easing of lockdown restrictions began in March.
The manufacturing purchasing managers’ index printed at 60.4 in July, down from 63.9 the month before. The services PMI, meanwhile, came in at a four-month low of 57.8 compared to 62.4 in June.
Survey respondents highlighted severe shortages of raw materials and the impact of Covid-19 isolation on staff availability.
Chris Williamson, chief business economist at IHS Markit, said: “July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.
“Although business activity continued to grow, aided by the easing of lockdown restrictions to the lowest since the pandemic began, the rate of expansion slowed sharply to the weakest since March.”
ING economist James Smith said: “The latest UK purchasing managers indices, while still healthy, hint at an economic recovery that’s stalling as Covid-19 cases rise.
“We’re still expecting a positive third-quarter growth figure in the region of 1.5%, though clearly further progress towards pre-virus levels relies on prevalence falling back once more.”