What's happened
UK service activity has contracted in June while manufacturing continues to expand, signaling a mixed momentum for the economy. Analysts warn growth remains weak into the second half as energy costs and geopolitical tensions weigh on demand.
What's behind the headline?
Key takeaways
- Services activity has declined into contraction in June, signaling a weakening economy in the services-driven sector.
- Manufacturing shows resilience with continuing expansion, aided by stockpiling and input-cost dynamics.
- Geopolitical tensions and energy price volatility are constraining demand and investment.
What this means
- The economy is losing momentum despite early-year gains, and the second half could test policymakers and firms as costs remain pressured.
- Firms may continue to adjust capex and hiring in response to uncertain demand and policy signals.
Risks and questions
- How lasting is the manufacturing strength if energy prices stay volatile?
- Will service-sector weakness spill over to consumption and GDP?
How we got here
The latest PMI readings from S&P Global show services activity slipping in June, following a stronger start to 2026. Manufacturing, however, has held above the expansion threshold, helped by stockpiling and expectations of higher prices. The data come amid geopolitical tensions and domestic political uncertainty, with potential implications for investment and consumer spending.
Our analysis
According to S&P Global surveys cited by major outlets, June saw continued service-sector weakness while manufacturing demonstrated resilience. Analysts highlighted energy-price dynamics and geopolitical risk as the main headwinds. No single outlet fully dominates the narrative, but consensus flags slower momentum into Q3 2026.
Go deeper
- Will services regain momentum in the coming months?
- How will energy prices shape manufacturing and consumer demand?
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