UK business activity buoyed by staycations, hot weather and World Cup

The recent heatwave, the World Cup and staycations by holidaymakers helped UK business activity bounce back to surprise growth this month.New early figures showed that activity in the private sector increased for the first in three months in July.The S&P Global flash UK composite purchasing managers’ index (PMI), which is watched closely by economists, recorded a reading of 52.

1 in July, rising from 49.3 in June.Any score above the 50.

0 threshold represents growth, with a reading below this pointing to decline.Analysts had predicted decline for the month, with the data significantly outstripping estimates of a 49.7 reading.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “UK businesses reported stronger activity in July, pointing to a faster pace of economic growth at the start of the third quarter.“Hospitality companies saw demand boosted by good weather, the Fifa World Cup and more domestic holidays, as high costs and uncertainty continued to deter some foreign travel.“However, overall services growth remained lacklustre amid cost-of-living pressures.”

Growth over the month was significantly driven by the UK’s manufacturing sector, which rose to a reading of 53.6 for the month.open image in galleryPeople enjoy the sun at Viking Bay, Broadstairs, Kent (Gareth Fuller/PA) (PA Wire)Goods producers saw production levels rise for the fourth consecutive month to take growth to its strongest level September 2024.

Firms linked the rise to “generally improving” market conditions and a rise in new orders.Elsewhere, the influential service sector also returned to growth, striking a three-month high of 51.8.

Surveyed companies said they saw stronger demand as the World Cup helped to boost activity in the hospitality sector, with fans going to pubs to watch matches.There were however still reports that “elevated uncertainty” linked to the conflict in the Middle East had impacted some consumer confidence, while parts of the sector were also affected by hot weather.July’s data also highlighted another moderation input price inflation, as cost pressures eased in the manufacturing and service sectors.

Thomas Pugh, chief economist at RSM UK, said: “The sharp rebound in the flash PMI suggests the economy received a timely boost from World Cup fever, good weather and lower fuel prices in July.“Combined with rising consumer confidence and stronger retail sales, it suggests households and businesses have taken the first phase of the Iran war remarkably well.”