UK private sector growth slowed in July 2025, with the composite PMI dipping to 51.0 from June's 52.0, 0.7 points below the consensus forecast and indicating only marginal expansion. While this marks the third consecutive month above the 50.0 threshold, the pace of growth faltered under weakening demand and rising cost pressures. Services continued to lead output (51.2), bolstered by modest consumer spending; yet this was the sharpest drop in momentum since April. Manufacturing showed faint signs of life, rising to a six-month high of 48.2, but remained in contraction, burdened by weak export demand and the fallout from US tariffs.

New orders fell again, led by the steepest decline in service-sector orders since April. Exports also continued their downward trend for a ninth month, with both goods and service firms citing global uncertainty and heightened competition. Consequently, firms slashed jobs at the fastest rate since February, driven by cost-cutting amid sustained wage inflation and rising overheads.

Input price inflation increased after three months of easing, driven by wage pressures, higher transport costs, and supplier mark-ups. Selling prices also rose faster, particularly in services. Although business confidence has ticked up, it remains fragile, tempered by geopolitical risk, domestic stagnation, and subdued global trade sentiment. These updates leave the RPI at 4 and take the RPI-P to minus 7. This means that economic activities continue to remain within the expectations of the UK economy.

The consensus looks for the PMI composite at 51.7 for July versus 52.0 in the June final. PMI manufacturing expected at 48.0 for July versus 47.7 in the June final. Forecasters expect the services index at 52.5 in July versus 52.8 in the June final.

The flash Composite Purchasing Managers’ Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy, around 650 companies in each case. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices 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 report also contains flash estimates of the manufacturing and services PMIs. The survey is produced by 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 purchasing managers' surveys, investors will know what the economic backdrop is for the various markets. The flash PMIs are particularly closely watched as they provide a wide ranging look at economic developments and some of the most up to date information available. 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.