The UK's private sector activity slumped to its weakest level in 14 months during June, driven by sustained weakness in the key services sector, according to new data from S&P Global. The flash UK composite purchasing managers' index (PMI) fell to 49.4 in June, down from 49.7 in May, marking the lowest reading since April 2025. A reading below 50.0 indicates contraction, and the figure fell short of economists' consensus forecast of 50.5.
Services Sector at Three-Year Low
The services sector, which includes hospitality, entertainment, and culture, recorded its weakest month in three years with a PMI of 48.7. The downturn was linked to sharply rising costs and a drop in customer confidence amid concerns over the Iran war and political uncertainty in the UK. Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "A disappointing June 'flash' PMI indicates that the economy contracted for a second successive month, albeit at only a 0.1% rate and merely flat-lining over the second quarter as a whole."
Manufacturing Offers Partial Offset
Weakness in services was partly offset by stronger manufacturing production, as firms highlighted a temporary uptick in demand due to stockpiling products before potential price increases. However, manufacturers saw new orders soften to a six-month low. Williamson noted that "an offsetting expansion of the manufacturing sector could soon falter, as demand here is being temporarily buoyed by the building of safety stocks amid ongoing war-related supply worries."
Price Pressures Persist
Firms continued to increase prices in reaction to cost pressures from the Middle East conflict and government policy. Prices paid by businesses moderated slightly over the month but remained at elevated levels. The rate of inflation for prices charged eased compared with May but still rose in June. Thomas Pugh, chief economist at RSM UK, commented: "The flash composite PMI weakened further in June, suggesting that the economy has stagnated across Q2. Indeed, we doubt growth will pick up much through the rest of the year."
Economic Outlook
Economists indicated that the latest figures suggest the economy could have shrunk during June. Pugh added: "Even if a Burnham coronation is likely, avoiding a messy, protracted leadership contest, there will still be speculation about the direction of fiscal policy in the coming months." The data underscores ongoing challenges for the UK economy as it grapples with geopolitical tensions and domestic political uncertainty.
