UK economy shrinks for second straight month, flash PMI shows

[LONDON] The UK economy shrank for a second consecutive month in June, according to a prominent private-sector survey that showed firms cutting more jobs.

S&P Global’s purchasing managers’ index slipped to 49.4 in the initial flash estimate, a 14-month low and slightly down from 49.7 in May. All readings below 50 point to economic contraction.

The survey gives weight to the expectation of many economists who fear stagnant UK output in the second quarter of 2026, a disappointing slowdown after the country recorded the fastest growth in the G7 in the first quarter. 

The UK’s Labour government has struggled to deliver consistently higher growth, a key promise when it was elected in 2024.

It will now try again under a different leader, following the resignation of Prime Minister Keir Starmer on Monday.

Rising joblessness has become a problem for Labour and the S&P’s sub-index measuring employment has been in negative territory for 21 months.

It dipped to 46.8 in June from 47.1, with S&P citing ongoing pressures from conflict in the Middle East.

Input and output costs are still rising, but the pace has eased, the survey suggested.

“Some of the war-related price pressures have started to moderate,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

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“The subdued growth and labour market pictures suggest that demand and wage-bargaining power are sufficiently slack to prevent inflation becoming entrenched.” BLOOMBERG