UK Private Sector Activity Contracts for Second Straight Month as Services Weakness Weighs on Growth

Business activity in the United Kingdom’s private sector contracted for a second consecutive month in June, according to preliminary data from S&P Global, as weakness in the services sector outweighed continued growth in manufacturing.

The S&P Global UK Composite Purchasing Managers’ Index (PMI) fell to 49.4 in June from 49.7 in May, remaining below the 50-point threshold that separates expansion from contraction. The reading also came in below economists’ expectations of 50.6.

The latest figure marks a second month of declining private sector activity following an 11-month period of expansion and suggests that growth momentum in the British economy remained under pressure at the end of the second quarter.

Services activity weakened further during the month, with the sector PMI declining to 48.7 from 49.3 in May. Manufacturing, meanwhile, continued to expand, with the sector index rising to 53.6 from 52.2, indicating stronger production among goods producers.

According to the survey, total private sector sales recorded their largest decline since April 2025. Falling demand in the services sector offset gains in manufacturing, although growth in factory output moderated to its slowest pace in six months.

Backlogs of work increased at the fastest rate in seven months, while employment continued to decline at a relatively rapid pace. Survey respondents cited higher National Insurance contributions as one factor contributing to ongoing pressure on hiring decisions.

On the inflation front, input cost growth eased for a second consecutive month. S&P Global noted that a modest de-escalation of tensions in the Middle East helped reduce some of the upward pressure on energy prices. However, overall cost increases remained elevated compared with historical averages.

Businesses also reported softer increases in prices charged to customers, suggesting some moderation in output inflation during the month.

The latest PMI data points to mixed conditions across the UK economy, with manufacturing continuing to expand while service-sector activity remains under pressure. Future economic releases may provide additional insight into demand trends, labor market conditions, inflation dynamics, and the broader outlook for economic activity in the months ahead.