S&P Global said its index of private-sector growth fell to 50.9 this month. That’s the worst reading since the height of the UK lockdown in February 2021 and close to the level of 50 that separates expansion from contraction. Manufacturing dragged down the reading with the slowest activity in 27 months. Service industries expanded at the lowest pace in 18 months.
The report is the latest to paint a bleak picture of the UK economy, with the Bank of England expecting a recession later this year. Soaring energy bills and an inflation rate one economist predicts could hit 18.6% are already eating into confidence and reducing investment plans.
The central bank has lifted interest rates to 1.75%, the highest since 2009, to rein in price growth and expects the economy to stagnate well into 2024.
While the S&P survey showed some signs inflationary pressures may be abating, albeit from highly elevated levels, there is continued evidence firms are struggling to cope with soaring prices. S&P said a number noted that increased economic uncertainty was weighing on confidence.