UK business activity expanded, but only marginally, in July. At a final 50.8, the composite output index was 0.1 point stronger than its flash estimate but still some 2.0 points short of its final reading in June and only just above the 50-expansion threshold.

The 51.5 flash services PMI was unrevised and so still stands 2.2 points below its final June print and at its weakest level during the current phase of expansion that began in February. New business continued to expand but much more slowly than at quarter-end and backlogs declined at the fastest rate in nearly two-and-a-half years. Rising interest rates, high inflation and squeezed budgets were all factors cited as reasons for the weakness of demand. Job creation remained positive but fell short of June's 9-month high with hiring freezes in some cases delaying the replacement of departing staff. Even so, business expectations remained positive for the year ahead, with around 48 percent of respondents anticipating an increase in output. That said, this was the lowest reading since January.

Inflationary pressures were again elevated with higher expenses in large part being passed onto customers. Nonetheless, the increase in output prices was among the smallest seen since the middle of 2021 due to increasingly competitive market conditions.

The final July data still suggest that the economy is essentially flatlining, with growth in services largely offset by declining output in manufacturing. For the BoE, the focus will be on the relative buoyancy of services and sustained significant wage pressures. As such, another, probable 25 basis point, hike in Bank Rate is to be expected later today. Both the UK's ECDI and ECDI-P now stand at zero, showing that economic activity in general is evolving in line with the forecasters' predictions.

No revisions are expected to the flash data leaving the composite output index at 50.7 and the services PMI at 51.5.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.