Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

UK growth slows sharply in July as COVID 'pingdemic' hits

Economic IndicatorsJul 23, 2021 11:05
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A person exits Bank underground station in the City of London financial district, in London, Britain, June 11, 2021. REUTERS/Henry Nicholls/File photo

By David Milliken

LONDON (Reuters) -Britain's rapid economic bounce-back from the coronavirus pandemic slowed sharply in July as a new wave of cases forced hundreds of thousands of workers to self-isolate under government rules to limit the spread of the disease.

Supermarkets and hauliers say staff shortages are making it hard to restock shelves and deliver goods, and Friday's monthly purchasing managers' index (PMI) data gave the first clear evidence of the scale of the impact.

The IHS Markit/CIPS flash composite PMI dropped to 57.7 in July from 62.2 in June. A reading above 50 indicates growth in the economy but the reading was the lowest since March and a sharper fall than most economists had forecast in a Reuters poll.

"July saw the UK economy's recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook," Chris Williamson, chief business economist at IHS Markit, said.

The economy was still on course to expand in the third quarter, but at a slower pace than before, he added.

The British PMI contrasted with the one for the euro zone, which struck its highest since July 2000, and sterling extended losses after the data.

Britain's economy has rebounded after its nearly 10% slump in 2020 when the country suffered one of the world's heaviest coronavirus death tolls and locked down for longer than many other European nations.

But reopening has created bottlenecks and inflation pressures. Two Bank of England policymakers have suggested an early end to the BoE's bond-buying stimulus.

Friday's PMI data showed a record rise in businesses' costs and a near-record increase in the prices they charged.

However, the weaker-than-expected activity figures are likely to make other policymakers wary of scaling back support next month. The BoE is due to announce its next policy decision on Aug. 5.

"Given today's numbers, the uncertainty around the Delta variant and the impact of the end of the Job Retention Scheme from September, we expect the Bank to stick to its current course," Willem Sels, chief investment officer at HSBC's wealth management division, said.


The slower growth in business activity seen in the PMI survey - conducted July 12-21 - contrasted with a return to pre-pandemic consumer confidence levels in a survey by market researchers GfK published earlier on Friday.

However, households did express greater concern about the economic outlook than a month earlier due to worries about COVID-19 variants, rising inflation and reduced furlough support.

Other figures showed retail sales volumes rose 0.5% in June to stand 9.5% above pre-pandemic levels, bolstered by a jump in food and drink during the Euro 2020 soccer tournament.

Monday marked the end of most COVID restrictions on businesses in England, with nightclubs allowed to reopen, mask-wearing requirements largely scrapped and capacity restrictions lifted for pubs, restaurants and shops.

But the reopening has been questioned by critics of the government, coming just as COVID cases are rising again.

The latest wave of infections led to more than 600,000 people in England and Wales being told to self-isolate last week because they were close contacts of people who tested positive and were "pinged" by a government app.

Businesses want the government to bring forward the scheduled Aug. 16 lifting of that requirement for workers who are fully vaccinated or test negative for COVID. The government said it would exempt up to 10,000 workers in food supply chains.

The fall in the PMI was greatest in the services sector, especially among transport and hospitality firms.

Orders growth was the weakest since February and business optimism fell to its lowest since October 2020, before news of effective COVID vaccines. Brexit-related trade frictions also hurt business morale and new orders.

UK growth slows sharply in July as COVID 'pingdemic' hits

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
John Smith
John Smith Jul 23, 2021 11:27
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So quit telling the government where you are 24/7
Edward King
Edward King Jul 23, 2021 11:27
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yes exactly .
som sithy
som sithy Jul 23, 2021 10:00
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email