U.K. flash PMI indices continued to recover in June from April lows, manufacturing PMI index rises to 50.1

U.K. PMIs continued their rebound from the April lows with both the manufacturing and services readings recording marked rises in June. The flash services PMI index rose to 47 in June from 29 previously, whereas the flash manufacturing PMI index rose to 50.1 from 40.7 in May, driving an overall rise in the composite PMI to 47.6. However, it should be noted that these rises come after record lows in April as the U.K. went into full lockdown mode. Given that restrictions have continued to be gradually eased since then, rebounds in the headline balances were always possible in June, noted Lloyds Bank in a research report.

The manufacturing PMI index moved a bit above the 50-mark, hinting a rise in monthly activity – for the first time since February. The component breakdown indicated that the largest contributor to the rebound was a rise in the output component, which rose to 50.8 from 34.9. According to IHS, this is because of the partial reopening of plants. Meanwhile, orders remained below 50. A pickup in these in months ahead would be a key indicator of whether the recovery will continue to gather strength, said Lloyds Bank.

The rebound in the services PMI was more pronounced, recording an 18-point rise to 47. Nevertheless, it remained slightly below the key-50 mark, in line with contracting activity. Nevertheless, it is possible that this is underestimating the overall level of activity in the sector, given that the PMI does not capture trends in retail or the public sector.

“Arguably, these are the two areas of the broad sector that have benefited the most from the further lowering in restrictions in June. Ultimately, the outlook for the economy remains contingent on the rate at which restrictions are eased. With a further scaling back from July – the near-term improvement in sentiment is likely to continue in the coming months”, added Lloyds Bank.