UK Economy Vibes 2025: Boom, Bubbles, and a Dash of Good News
After the Bank of England pulled the first rate‑cut lever earlier this month, businesses started feeling the jolt of fresh cash, and the market lights started flickering brighter.
Hiring Spree – The Fastest Since the Summer of 2023
More firms popped the hiring switch on, and the speed of job growth hit its highest gear since June 2023. Growth emails were flying in from everyone who filled out the survey, and their vibes were on the sunny side of the economy.
Inflation Beating a Slow‑Mo Beat
- Private‑sector input costs eased at their slowest rhythm since January 2021.
- August saw the lowest climb from last month’s values.
- Shifts in freight rates in the manufacturing sector got neatly neutralised by the softening of services‑sector inflation.
- Less supplier surcharging and a more competitive market were the sweeteners behind this cool down.
The PMI’s input‑price inflation gauge has been on fire – a 100% track record in predicting the dip in services‑inflation this year. After hitting a 3.5‑year low, the expectation shakily sits at 5.2% for August, well below the Bank of England’s forecast for a jump to 5.8%.
Thoughts from the Big‑Name Reporters
John Choong, head of equities and markets at Investors Edge: “These fresh PMI numbers feel like a rare recipe of higher growth and lower inflation. Private‑sector output is roaring at the fastest pace since April, while input costs remain the slowest bump since January 2021. That’s a sweet economic mix.
The real kicker? The PMI’s input‑price inflation gauge has nailed predictive power for services‑inflation drops. If this trend carries, we could see August dips even deeper – flouting the BoE’s 5.8% expectation.
This combo could be the twist that nudges the BoE towards a September rate cut, even if their previous stance seemed wary. Think a golden trio of acceleration, cooling inflation, and looser policy – a jackpot for the UK economy.
And if this groove keeps spinning, UK GDP forecasts might get a lift, possibly making the UK the star performer among the G7 in 2024.”
Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments: “The latest Flash PMI for August shows an encouraging climb across the private sector – composite at 53.4, services at 53.3, manufacturing at a 26‑month high of 52.5.
This momentum pushes the possibility of an upward revision for GDP. Still, whether the UK will outrun its G7 peers by year‑end remains a 70‑year‑old puzzle.
Inflation is easing, with input costs moving slow since 2021. The PMI’s track record for services‑inflation success suggests a decline below the BoE’s 5.8% forecast. Easier inflation opens the door for more rate cuts, and markets may start pricing in a September cut if the trend holds.”
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