The UK’s economic recovery from the coronavirus showed a slowdown in June as UK private sector growth fell to a four-month low this month.
According to a closely watched survey from IHS Markit, the IHS Markit/CIPS flash composite PMI fell to 57.7 in July from 62.2 in June. The latest reading was the lowest since March and a far steeper decline than most analysts had forecast.
The UK PMI contrasted sharply with that of the euro zone, which hit its highest level since July 2000 this month.
A fresh wave of Coronavirus cases has forced hundreds of thousands of workers to self-isolate. Dubbed the ‘pingdemic’, transport companies and food retailers are saying that staff shortages are making it difficult to deliver goods and restock shelves.
Concerns about the loss of momentum in the UK economy contributed to the lowest level of optimism towards the business outlook for nine months. Orders growth was the weakest since February and business optimism dropped to its lowest since October 2020, before news of the COVID vaccine rollout.
UK Bottleneck Created
Chris Williamson, chief business economist at IHS Markit, said in a note accompanying the data release:
“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,”
The UK economy, the world’s fifth-largest economy, has seen a recovery after slumping nearly 10% in 2020. Last year, the UK suffered one of the worst death tolls from the pandemic and saw its economy locked down longer than most of its European neighbours.
Since reopening, the UK has seen inflation rise and staff shortages help contribute towards an economic bottleneck.
Despite the weak economic news, the UK economy is still expected to expand in the third quarter of the year. However, there are strong indications that it will grow at a slower pace than before,
