"Rising interest rates and inflation threaten UK manufacturing"

" Rising interest rates and inflation threaten UK manufacturing \r\n\r\nHigher interest rates, strong inflation and pessimistic expectations for growth are weighing down businesses across the UK\u2019s services and manufacturing sectors, according to the latest gloomy report on the country\u2019s flagging economy.\r\n\r\nThis month\u2019s data from the S&P Global\u2019s Composite Purchasing Managers\u2019 Index (PMI) indicates the UK is in the challenging position of historically elevated interest rates amid signs of an economic slowdown.\r\n\r\nThe index surveys businesses in the services and manufacturing sectors \u2013 and is considered by market analysts to be a key economic indicator.\r\n\r\nIt revealed that the UK\u2019s services sector grew at its slowest pace in three months while the manufacturing sector contracted by the most in six months.\r\n\r\nThis caused the index to plummet to a three-month low of 52.8 in June \u2013 down from 54.0 in May \u2013 in the latest preliminary reading.\r\n\r\nChris Williamson, chief business economist at S&P Global Market Intelligence, said the survey indicated the economy had lost momentum after a brief growth spurt in the spring.\r\n\r\nIt now looked set to weaken further in the months ahead.\r\n\r\n\u201cMost notably, consumer spending on services, which was a core growth driver in the spring, is now showing signs of faltering,\u201d he said.\r\n\r\nHiring was one of the few spots of light in survey, with the strongest since September last year.\r\n\r\nHowever, this was a double-edged sword, as it also contributed to higher wage growth \u2013 feeding into inflation pressures in the service sector.\r\n\r\nThis a huge concern for the Bank of England\u00a0 which is expected to continue to raise borrowing costs \u00a0as it tries to tackle inflation\u00a0 which held at 8.7 percent in May. \r\n\r\nSuch action sharpens the likelihood of a recession, which Williamson described to be \u201cincreasingly inevitable\u201d as \u201ccollateral damage in the fight against inflation\u201d"

"Rising interest rates and inflation threaten UK manufacturing"

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