UK factories return to growth as Covid-19 slump eases - business live

Rolling coverage of the latest economic and financial news, as the latest PMI reports show the global recession is easing

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10.03am BST

Duncan Brock, group director at CIPS, is encouraged that UK factories returned to growth this month - just (a PMI of 50.1 is barely over stagnation).

But the wider economy still appears to be shrinking, he points out:

Services remained weakened and still in contraction and there are deep concerns about how the end of furlough support will affect employment levels in the next few months.

In general, this is good news for the UK economy, but in terms of any significant recovery, 2020 is likely to be a write-off. The following year may see some more stability and real growth as the pandemic's effects continue to ripple through the remainder of 2020.

A very similar number from the UK at 47.6 for its PMI. However surely both numbers should be above 50 now.... https://t.co/RQT6Lsdlhs

The nature of the PMIs makes them tricky to interpret at the moment, but the rise in the composite PMI from 30.0 in May to 47.6 in June (consensus 41.0) suggests that the further easing in the lockdown on 15th June has led to a further rebound in economic activity after the sharp fall in April.

Taken literally the fact that the flash composite PMI remained below the no-change level of 50 in June suggests that activity fell further as it should compare activity to the previous month. But many respondents appear to be comparing activity in June to its normal level. So the rise in the composite PMI suggests that activity continued to recover in June, but that it is still well below normal.

Big rebound in UK flash PMIs in June, to 47.6 - just shy of the 50 level that separates expansion from contraction. Factories just in growth territory. But companies reporting an improvement in activity compared with April and May does not mean we are anywhere close to normal

9.48am BST

UK manufacturing output index is rising this month after a three-month slump, Markit reports.

Here's the details:

Higher volumes of production were linked to a partial reopening of manufacturing plants. However, total new orders continued to decline in June, with manufacturers often commenting on shortages of new sales to replace completed contracts. Survey respondents cited particularly weak demand across the automotive and aviation sectors in June. Looking ahead, manufacturers indicated a rise in business optimism to its highest since September 2018.

Expectations of higher output in the next 12 months reflected hopes of a sustained recovery in manufacturing operations from the slump in production volumes seen during the initial phase of the COVID-19 pandemic