British economy entered growth mode in July: businesses recovering from inflationary pressure

British business demonstrated an unexpected recovery in July, breaking a series of quarterly declines in activity. According to the latest data from the S&P Global survey, the Purchasing Managers' Index (PMI) jumped to 52.1 points, exceeding both previous levels and analyst forecasts.

A key driver of growth proved to be the services sector, which reached its highest level since April. The manufacturing sector also noted a positive trend, rising to 52.8 points. According to Chris Williamson from S&P Global Market Intelligence, favorable weather and domestic tourism, driven by high costs for foreign travel, significantly helped the hospitality industry.

An important factor for the improvement is also the easing of price pressure on businesses. Lower fuel and raw material costs, following a temporary calming of geopolitical tensions in the Persian Gulf region, led to the weakest growth in manufacturing costs since February. This creates opportunities for a more stable monetary policy from the Bank of England.

Despite the optimism, economists remain cautious. Despite the drop in oil prices, energy shocks and logistical problems arising from the Middle East conflict continue to keep inflationary pressure at a high level. At the same time, a trend toward slowing employment is observed, as changes in social security increased employer costs.

Parallel to business indicators, an improvement in consumer confidence is also being noted. The GfK index shows that British consumers are most optimistic since the beginning of the year, which further supports expectations for economic recovery in the coming months.