Activity in the UK’s private sector has slumped to its weakest level for 14 months amid “sustained weakness” in the key services sector, according to new figures.
It also came as firms continued to increase prices in reaction to cost pressures from the Middle East conflict and government policy.
The S&P Global flash UK composite purchasing managers’ index (PMI), which is watched closely by economists, recorded a reading of 49.4 for June, decreasing from 49.7 in May.
It marked the lowest level since April 2025.
Any score above the 50.0 threshold represents growth, with a reading below this pointing to decline.
It was below the 50.5 reading predicted by a consensus of economists.
Economists indicated that the latest figures mean that the economy could have shrunk during the month.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “A disappointing June ‘flash’ PMI indicates that the economy contracted for a second successive month, albeit at only a 0.1% rate and merely flat-lining over the second quarter as a whole.
“While current weakness is focused on consumer-facing services, an offsetting expansion of the manufacturing sector could soon falter, as demand here is being temporarily buoyed by the building of safety stocks amid ongoing war-related supply worries.”
The fresh report showed that the UK’s services sector suffered its weakest month for three years, with a reading of 48.7.
The sector’s downturn was linked to sharply increasing costs and a drop in customer confidence amid concerns over the Iran war and political uncertainty in the UK.
Weakness in services was partly offset by stronger manufacturing production as surveyed firms highlighted a “temporary uptick” in demand due to stockpiling products before potential price increases.
Nevertheless, manufacturers saw new orders soften to a six-month low.
Prices paid by businesses moderated slightly over the month but remained at “elevated” levels.
Firms also flagged that prices charged continued to rise in June but saw the rate of inflation ease compared with May.
Thomas Pugh, chief economist at RSM UK, said: “The flash composite PMI weakened further in June, suggesting that the economy has stagnated across Q2.
“Indeed, we doubt growth will pick up much through the rest of the year.
“Even if a Burnham coronation is likely, avoiding a messy, protracted leadership contest, there will still be speculation about the direction of fiscal policy in the coming months.”
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