Latest data released by Markit/CIPS - 24 July 2020

  • Prior 47.7
  • Manufacturing PMI 53.6 vs 52.0 expected
  • Prior 50.1
  • Composite PMI 57.1 vs 51.7 expected
  • Prior 47.7

The easing of lockdown measures has spurred a solid upturn in UK business activity, but once again this just reaffirms that conditions here are much better than they were compared to the May to June period. Still, it is a positive takeaway nonetheless.

The bright side is that the recovery is headed in the right direction, but it remains to be seen how much of that can be sustained especially with the government's furlough program set to end later in the year in October.

That will provide the real test of the UK's economy mettle and provide a better reflection of the strength of this recovery in general.

Cable is inching slightly higher on the report, moving from 1.2730 to 1.2744 but I don't think there is much to really chew at here. Markit notes that:

"The UK economy started the third quarter on a strong footing as business continued to reopen doors after the COVID-19 lockdown. The surge in business activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter.

"However, while the recession looks to have been brief, the scars are likely to be deep. Even with the July rebound there's a long way to go before the output lost to the pandemic is regained and, while businesses grew more optimistic about the year ahead, a V-shaped recovery is by no means assured.

"New orders showed only a relatively small rise in July, indicating that demand remains worryingly low at many firms. Hence July saw yet another sharp cut to employment levels as increasing numbers of companies scaled back their operating capacity. Many households are therefore likely to remain cautious with respect to spending with the job market deteriorating.

"Furthermore, not only do many consumer-facing businesses remain especially hard-hit by the pandemic and ongoing social distancing, we remain very concerned about the extent to which the recovery could be smothered by a lack of postBrexit trade deals.

"July's PMI represents a step in the right direction, but there is a mountain still to climb before a sustainable recovery is in sight."