UK business activity rises in July as consumer confidence and spending improve

London, United Kingdom. British firms reported their first rise in activity in three months in July, supported by a brief respite in the Iran war, improved consumer confidence and higher spending. The data may provide only a short-lived boost to Prime Minister Andy Burnham.

Business activity

The preliminary S&P Global UK Composite Purchasing Managers’ Index rose to 52.1 in July from 49.3 in June, its strongest reading since February and above all forecasts in a Reuters poll.

A reading above 50 indicates growth in activity, while a reading below that level points to contraction.

The services PMI increased to 51.8 from 48.8, its strongest level since April. The manufacturing PMI rose to 52.8 from 52.5.

Hospitality support

Chris Williamson, chief business economist at S&P Global Market Intelligence, said hospitality firms benefited from hot weather, the soccer World Cup and people choosing to holiday in Britain as high costs and uncertainty discouraged overseas travel.

Retail sales and confidence

Official data showed retail sales volumes unexpectedly increased in June, driven by online sales, clothing purchases and shoppers buying air conditioning during hot weather.

A separate GfK consumer confidence index showed consumers were the most optimistic since January this month, reflecting hopes of an economic turnaround.

JPMorgan economist Allan Monks said the June and July data sent a positive message on growth, sentiment and inflation pressures.