An industry survey showed that British economy is showing signs of thwarting as high inflection hits new orders and businesses report levels of concern that normally signal a recession. Meanwhile, the S&P Global Purchasing Manger Index (PMI), covering services and manufacturing firms, showed that companies are passing the high cost of operation to the clients worrying the Bank of England.
Chris Williamson, chief business economist at S&P Global Market Intelligence said: “the economy is starting to look like it is running on empty”. Further, he said: “business confidence has now slumped to a level which has in the past typically signaled an imminent recession; also the economy was likely to show a fall in output in the second quarter that could deepen in the third quarter”.
The PMI's measure of new orders effectively stagnated as it fell to 50.8, the lowest in over a year. Factory orders dipped below the 50 growth threshold to 49.6. The PMI’s business expectations index fell by 4.6 points in June, which is largest monthly decline since the start of Covid-19. Manufacturers and service providers both reported lowest business optimised level; since May 2020.
The Bank of England says that the recent jump in inflation, which hit 40-year high of 9.1% in May, might turn into a permanent problem for the British economy.
