UK factory activity slips in July, but cost inflation past peak

Factory activity in the UK grew at its slowest pace of the past 25 months in July, as output shrank for the first time in more than two years and new work intakes and new export business fell further alongside.

S&P Global's manufacturing sector Purchasing Managers' Index for July was revised down from a preliminary print of 52.2 to a reading of 52.1.

That was below a June reading of 52.8 and a consensus forecast of 52.2.

Commenting on the survey data, Rob Dobson, director at S&P Global Market Intelligence, highlighted how new order intakes had registered their first back-to-back monthly declines for two years.

"Rising market uncertainty, the cost of living crisis, war in Ukraine, ongoing supply issues and inflationary pressures are all hitting demand for goods at the same time, while lingering post-Brexit issues and the darkening global economic backdrop are hampering exports.

"With the Bank of England implementing further interest rate hikes to combat inflation, the outlook is beset with downside risks. With this in mind, the continued low degree of optimism among manufacturers is of little surprise."

Dobson however also noted the improvement in employment with the rate of job creation having hit a three-month high. There were also signs that cost inflation and supply chain stresses had both passed their respective peaks.