With economic activity rebounding, British inflationary pressures hit a record high
A closely watched survey showed that as British companies continued to rebound, inflationary pressures hit a record high in June. The survey showed that after the reopening from the blockade last month, business activity only slightly declined.
In June, the IHS Markit/Cips mid-term comprehensive purchasing managers index was 61.7. Slightly down The final reading in May hit an all-time high of 62.9, matching some of the highest readings since the beginning of the survey in 1998.
But even though economists say the fall indicates that the reopening boom may have passed its peak, rising inflationary pressures have highlighted the danger of rapid price increases as companies expand.
According to the survey report, the input cost inflation index has risen for five consecutive months, in line with the historical record set in 2008, while the output price inflation rate has set a record high for the second consecutive month.
“Inflation concerns continue to intensify,” said Chris Williamson, chief business economist at IHS Markit.
“The record level of survey price indicators and the further development of capacity constraints strongly suggest that after the Bank of England’s 2% target has been exceeded in May, consumer price inflation will rise further.”
The PMI data was collected from June 11 to 21 and is a weighted measure of the responses of service and manufacturing leaders. Any reading above 50 indicates that most respondents report an increase in activity.
The report on rising inflationary pressures comes after annual consumer price growth has been hit 2.1% last month, Unexpectedly surpassed the Bank of England’s target, heightening concerns that rapid expansion after lock-in might be accompanied by sharp inflation.
The Bank of England, which held its monetary policy meeting on Thursday, faces pressure to show it Can control inflation After it failed to foresee rapid growth this spring. Andy Haldane, the bank’s chief economist, warned against becoming complacent about the danger of rising prices.
The PMI survey shows that new orders have grown rapidly this month. As companies recruit employees in response to increasing demand, job opportunities created have accelerated to the strongest level in the history of the series. Respondents also expressed confidence that output will increase next year.
However, optimism fell to its lowest level in five months, and respondents also reported labor shortages, pushing up wage costs. Williamson said this adds to concerns that “the recent surge in inflation may become more difficult.”
Lloyd’s Bank senior economist Reese Herbert said that although the data indicated an overall “strong sustained recovery”, worker shortages, supply chain disruptions and rising cost pressures “begin to hinder output.
Samuel Tombs, chief British economist at consulting firm Pantheon Economics, said that “optimistic” PMI readings are inconsistent with other evidence, such as the National Bureau of Statistics Business Survey, which suggests that “the slowdown is more severe.”
“Markit’s survey is usually more of an emotional barometer than a precise measure of business activity. We still believe that the monthly GDP growth may slow to around 1.5% in May and to 0.5% in June. %,”He says. Say.
Kieran Tompkins, an assistant economist at Capital Economics, a consulting firm, said that the small drop from the surge immediately after the blockade was lifted indicates that “the pace of recovery may have peaked”.
He said that given that the survey was conducted within a month after the indoor hotel reopened, the decline in service activities was particularly surprising. But he added that the “noble” measure shows that the industry is “still growing at a healthy rate,” which indicates that GDP will return to pre-pandemic levels by August.