<\/p>\n\n\n\n
Composite PMI Falls Below Expectations Amid Trade, Tax, and Wage Pressures<\/strong><\/p>\n\n\n\n The UK economy is facing early signs of stagnation as July\u2019s flash Purchasing Managers’ Index (PMI)<\/strong> data revealed a decline in business activity at the start of the third quarter of 2025. The composite PMI dropped to 51.0<\/strong> in July from 52.0<\/strong> in June, falling short of the consensus forecast of 51.7<\/strong>. The PMI<\/strong>, which tracks business conditions in services and manufacturing, suggests the UK economy continues to struggle with multiple challenges.<\/p>\n\n\n\n Despite some improvements in manufacturing, employment conditions<\/strong> continued to deteriorate, with the composite employment balance<\/strong> falling further to 45.1<\/strong> from 46.6<\/strong> in June. This points to an ongoing decline in payroll employment<\/strong>, signaling that companies are cautious about expanding their workforce in the face of uncertain economic conditions.<\/p>\n\n\n\n On a three-month basis<\/strong>, the rate of employment decline is around 0.2%<\/strong>, slightly better than the 0.3%<\/strong> contraction recorded in June, but still indicative of a sluggish labor market.<\/p>\n\n\n\n The services output prices balance<\/strong> rebounded slightly to 54.7<\/strong> in July from 52.9<\/strong> in June, reversing part of last month\u2019s sharp decline. This uptick suggests that services inflation<\/strong> could potentially slow, with services CPI inflation<\/strong> expected to fall from 4.7%<\/strong> in June to below 4.0%<\/strong> over the next six months. This trend supports expectations that the upside risks for inflation are fading.<\/p>\n\n\n\n Despite the stronger-than-expected inflation and labor market data<\/strong> released last week, the overall economic picture indicates that the risks of further inflationary pressures are decreasing. The Bank of England<\/strong> (BoE) is likely to take these signals into account as it considers its monetary policy stance.<\/p>\n\n\n\n With inflation risks moderating, there is growing speculation that the Bank of England<\/strong> could proceed with interest rate cuts<\/strong>. The central bank is expected to lower its benchmark rate from the current 4.25%<\/strong> to 4.00%<\/strong> in August 2025<\/strong>, with quarterly cuts<\/strong> of 25 basis points expected to follow.<\/p>\n\n\n\n The latest PMI data paints a mixed picture<\/strong> of the UK economy, with weakness in services<\/strong>, some improvement in manufacturing<\/strong>, and deteriorating employment conditions<\/strong>. The combination of higher tariffs<\/strong>, tax hikes<\/strong>, and wage increases<\/strong> continues to weigh on growth. However, the declining inflationary pressures could pave the way for more accommodative monetary policy<\/strong> from the Bank of England, providing some support to the economy in the months ahead.<\/p>\n","protected":false},"excerpt":{"rendered":" Composite PMI Falls Below Expectations Amid Trade, Tax, and Wage Pressures The UK economy is facing early signs of stagnation as July\u2019s flash Purchasing Managers’ Index (PMI) data revealed a decline in business activity at the start of the third quarter of 2025. The composite PMI dropped to 51.0 in July from 52.0 in June, …<\/p>\n","protected":false},"author":9,"featured_media":54454,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[6827,37,36],"tags":[7202,10286,9848],"class_list":["post-116975","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-daily-economic-reports","category-forex-markets","category-market-updates","tag-bank-of-england","tag-pill","tag-pmis"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/116975","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=116975"}],"version-history":[{"count":1,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/116975\/revisions"}],"predecessor-version":[{"id":116976,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/116975\/revisions\/116976"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/54454"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=116975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=116975"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=116975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Key Points:<\/strong><\/h3>\n\n\n\n
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Employment Conditions Deteriorate<\/strong><\/h3>\n\n\n\n
Outlook and Bank of England’s Response<\/strong><\/h3>\n\n\n\n
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