UK business activity falls again in June amid weak demand and job cuts
Britain’s private sector contracted for a second straight month in June.
The latest flash purchasing managers’ index from S&P Global showed the UK composite PMI slipped to 49.4 in June from 49.7 in May.
The reading marked a 14-month low.
Any reading below 50 signals a contraction in business activity.
The survey adds to concerns that the UK economy may have stalled in the second quarter of 2026 after a strong start to the year.
Britain had recorded the fastest growth among Group of Seven economies in the first quarter, but momentum now appears to have faded.
Weak second-quarter outlook
The June survey pointed to a difficult backdrop for the UK economy.
Official data released earlier this month showed that the economy contracted by 0.1% in May.
S&P Global said the June PMI data suggested a similar outcome could follow, which would leave output flat across the second quarter.
The economic challenge has become more complicated after Prime Minister Keir Starmer said on Monday that he would step down.
The PMI data, published a day after Starmer’s announcement, underscored the difficult conditions facing the next phase of Labour leadership.
Assuming no challenge from another Labour lawmaker, the economic agenda is expected to fall to Andy Burnham, the former mayor of Greater Manchester, at a time when growth remains uneven, inflation is proving sticky, and public finances are under pressure.
Employment and demand remain under strain
The labour market remained a weak point in June.
S&P Global’s employment sub-index stayed in contraction territory for a 21st consecutive month, falling to 46.8 from 47.1 in May.
The survey suggested firms continued to reduce headcount as new work slowed and business confidence remained subdued.
New business also deteriorated sharply.
S&P said the index for new orders fell to its lowest level since January 2021, highlighting the pressure on companies as demand softened.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the latest readings pointed to a sluggish economy and a weakening labour market.
“Some of the war-related price pressures have started to moderate,” Williamson said.
“The subdued growth and labor market pictures suggest that demand and wage-bargaining power are sufficiently slack to prevent inflation becoming entrenched.”
S&P also said ongoing pressures linked to conflict in the Middle East continued to weigh on sentiment and operating conditions for firms.
Cost pressures ease slightly, but remain high
One of the few brighter spots in the June survey was a slight easing in cost pressures.
Input and output costs continued to rise, but the pace of increase slowed compared with earlier months.
The moderation comes after energy-related costs surged following the outbreak of war in the Middle East.
Oil prices, which had climbed above $120 a barrel during the conflict, have fallen below following an apparent truce between the United States and Iran that is expected to keep the Strait of Hormuz open.
Even so, prices remain roughly $10 a barrel higher than before the conflict.
S&P Global warned that cost pressures were still elevated despite the recent easing.
Manufacturing growth slows
The survey showed that Britain’s manufacturing sector continued to expand in June, but at a slower pace.
The manufacturing PMI fell to 53.1 from 53.9 in May, a three-month low.
That still left factory activity in growth territory, but the broader picture across the private sector remained weak as the larger services side of the economy struggled.
Taken together, the June figures suggest the UK entered the summer with little economic momentum.
A second consecutive contraction in the composite PMI, falling new business, and continued job cuts all point to a fragile outlook for growth as political uncertainty adds another layer of pressure.
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