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The S&P Global UK Manufacturing PMI climbed to 47.7 in June, matching expectations and improving from May’s 46.4, but remaining well below the 50.0 threshold, signaling the 13th consecutive month of contraction in the sector.

The increase reflects slower declines in new orders and output, suggesting that the worst of the downturn may be easing. However, persistent weak demand, cautious business investment, and elevated borrowing costs continue to constrain the UK’s manufacturing recovery.

Analysts note that while the uptick points to tentative stabilization, the sector’s prolonged weakness highlights the need for sustained improvements in domestic and export demand to achieve a meaningful return to growth.

The Nationwide House Price Index (HPI) showed a 0.8% MoM decline in June, far worse than expectations for a 0.2% drop and reversing May’s 0.4% gain, signaling renewed weakness in the UK housing market amid elevated mortgage rates and fragile buyer sentiment.

On an annual basis, house price growth slowed to 2.1% YoY, down from 3.5% in May and below the forecast of 3.3%, marking the slowest yearly increase since early 2024.

The sharp monthly fall highlights mounting affordability pressures and cautious demand, as average mortgage rates hover above 7% and household budgets remain stretched. Analysts warn that unless borrowing costs ease meaningfully, house prices could face further downward pressure in the coming months.

The British Retail Consortium (BRC) Shop Price Index rose 0.4% YoY in June, sharply above expectations of 0.2% and a marked turnaround from April’s -0.1% deflation. This is the strongest annual shop price growth since January, signaling renewed upward pressure on retail prices.

The rise was driven by broad-based gains across both food and non-food categories, suggesting that retailers are beginning to recover their pricing power after months of aggressive discounting. However, analysts caution that fragile consumer confidence and elevated living costs could cap retailers’ ability to maintain higher prices in the months ahead.

The stronger-than-expected rise in shop prices could complicate the Bank of England’s efforts to balance slowing headline inflation with signs of sticky price pressures in key retail sectors.

• Consumer credit rose by just £0.859 billion in May, well below expectations of £1.10B and sharply lower than April’s £1.944B, highlighting weak household borrowing appetite amid high interest rates and cost-of-living pressures.
• Net lending to individuals, a broader measure of consumer and mortgage borrowing, climbed £2.9 billion, far short of the expected £4.1B but a rebound from April’s muted £0.82B billion.
• Mortgage approvals increased to 63,030, topping forecasts of 61K and improving on April’s 60.66K, suggesting some resilience in housing demand despite high rates.
• Mortgage lending totaled £2.05 billion, weaker than expectations of £2.5B but a notable turnaround from April’s negative lending (-£0.78B), indicating a modest recovery in housing finance flows.
• Mortgage rates in June averaged 7.09%, reflecting persistent cost pressures on new borrowers.
• On the money supply side, M3 rose to £3,133.6 billion, up from £3,127.1B in April, while M4 money supply grew 0.2% MoM, matching expectations and reversing April’s -0.1% decline.

The figures underscore continued headwinds for UK consumers and the housing market, with high borrowing costs weighing on credit growth despite tentative signs of stabilization in mortgage activity.

• The UK current account deficit widened to £23.5 billion in Q1, larger than both the expected £19.7B and the prior quarter’s £ 21.0. The deterioration reflects rising income outflows and a weak trade balance, highlighting the UK’s continued reliance on external financing.
• Meanwhile, GDP expanded 0.7% QoQ in Q1, matching forecasts and rebounding strongly from just 0.1% growth in Q4 2024, signaling renewed momentum in economic activity driven by stronger services and improved business investment.
• On an annual basis, GDP grew 1.3% YoY, in line with expectations but slightly down from 1.5% in Q4, reflecting a still-positive but moderating trend compared to last year’s post-pandemic recovery peaks.

The combination of a solid GDP rebound and a widening current account deficit underscores both opportunities and vulnerabilities in the UK economy: while growth is regaining traction, persistent external imbalances remain a key structural challenge.

• Business investment grew 6.1% YoY in Q1, a significant acceleration from just 1.8% growth in the prior quarter, indicating a robust rebound in corporate spending even as it fell short of the 8.1% market forecast.
• On a quarterly basis, investment rose 3.9% QoQ, lower than expectations of 5.9% but a solid improvement from the -1.9% decline recorded in Q4 2024.

The data suggest renewed confidence among UK firms, supported by easing recession fears and stabilizing economic conditions. However, the fact that investment growth undershot forecasts highlights that uncertainties remain, including elevated borrowing costs and geopolitical risks, which could still weigh on longer-term capital spending.

The CBI Distributive Trades Survey for June plunged to -46, significantly worse than expectations of -24 and down sharply from May’s -27. This marks one of the lowest readings since the pandemic, signaling a severe downturn in retail sales volume compared to a year earlier.

The data reflects weak consumer demand, cost-of-living pressures, and cautious household spending amid sticky inflation and high interest rates. Retailers across sectors, including clothing, furniture, and durable goods, reported broad-based declines.

This steep fall raises concerns over the health of UK consumer spending as the economy continues to struggle with stagnation and elevated borrowing costs.

🕕 Tuesday, 24 June 2025

The CBI Industrial Trends Orders index in the UK dropped to -33 in June, worse than both the expected -28 and May’s -30 reading.

This marks a further deterioration in manufacturing demand, as firms report weaker order books amid high input costs, sluggish global demand, and Brexit-related trade frictions.

The data suggests continued contraction in UK factory activity, adding pressure on policymakers and business leaders to support the sector.

S&P Global’s UK Composite PMI rose to 50.7 in June—above the 50.5 forecast and May’s 50.3—indicating a pickup in overall business activity. Manufacturing PMI improved to 47.7, beating the 46.9 estimate though still below 50, while the Services PMI climbed to 51.3, ahead of the 51.2 consensus and up from 50.9, underscoring stronger growth in services.

UK public sector net borrowing in May came in at £17.69 billion (forecast: £17.90 billion; April: £20.05 billion), marking a notable decline in government borrowing. However, the public sector net cash requirement jumped to £20.94 billion in May (April: £9.28 billion), reflecting elevated financing needs.

The UK’s core retail sales fell 2.8% month-on-month in May (forecast: –0.5%; April: +1.4%), marking the steepest drop in over two years. Year-on-year, core sales contracted 1.3% (forecast: +1.8%; April: +5.2%). Overall retail sales tumbled 2.7% MoM (forecast: –0.5%; April: +1.3%) and declined 1.3% YoY (forecast: +1.7%; April: +5.0%), underscoring a broad-based pullback in consumer spending.

The GfK Consumer Confidence index for June improved to –18 (forecast: –19; May: –20), signaling a slight uptick in sentiment though remaining firmly in negative territory.