Firms in the United Kingdom are facing unprecedented cost inflation as the country’s strong expansion slows.
Firms in the United Kingdom have been slammed by record inflationary pressures this month, according to fresh numbers showing that the private sector’s strong expansion in activity slowed only marginally in June compared to May’s record levels.
The IHS Markit/CIPS Flash UK Composite PMI survey, which is keenly watched, came in at 61.7, down from 62.9 last month.
Despite the dip, any score above 50 indicates growth, and the reading still marks one of the strongest monthly growth rates since 1998.
The flash figures are preliminary data for June; more detailed data for the entire month will be available in July.
The initial figure for June fell short of analysts’ expectations, who projected a reading of 62.9 for the month.
Input cost inflation surged for the fifth month in a row to the joint-fastest on record, according to the report, owing to rising demand and supply chain disruption.
“Businesses are reporting a continuous rise in demand in June as the economy reopens, spearheaded by the hospitality industry, meaning the second quarter seems to have seen economic growth rebound very sharply from the first quarter’s decline,” Chris Williamson, chief business economist at IHS Markit, said.
“There are some indicators that the rate of expansion may have peaked, as output and new order growth slowed slightly from record levels in May, but full order books and a further relaxing of virus-fighting regulations should help guarantee growth remains strong as we approach into summer.”
The relaxing of Covid-19 limitations last month, as well as increased demand, led to considerable growth in the services sector, according to the latest data.
In the services industry, new orders and overall activity both increased significantly in June, while they were still slightly below May’s record level.
In other news, the flash manufacturing rating fell slightly from 65.6 last month to 64.2, the second-highest growth since 1992.
According to surveyed organizations, greater output and new orders resulted in “elevated” employment creation, despite pressure on the supply chain resulted in “significantly increased backlogs of work.”
Demand is on the rise, and it’s getting worse. (This is a brief piece.)