Economists caught off guard by a sharp deceleration in private sector growth.

 The decline in the purchasing managers' index score was significantly higher than what experts had predicted.

The UK's private sector has experienced a significant slowdown in growth during the current month, falling well below expectations according to a closely monitored survey. The Purchasing Managers' Index (PMI), compiled by S&P Global and the Chartered Institute of Procurement and Supply (CIPS), revealed that it reached its weakest level in six months. The PMI scored 50.7 in July, a sharp decline from the previous month's 52.8.

While the figures indicate that the economy is still expanding, with anything above 50 considered positive, this represents a notable deceleration and is far worse than the forecasted 52.3 by experts. The lower the score goes, the more concerning it becomes for the overall economy.

Companies participating in the survey reported being impacted by rising interest rates, persistent high inflation levels, and cautious consumer behavior. These factors have dampened the post-pandemic recovery in household spending on leisure activities, as indicated by the survey.

Chris Williamson, chief business economist at S&P Global Market Intelligence, expressed concerns about the situation, stating, "The UK economy has come close to stalling in July, which, combined with gloomy forward-looking indicators, reignites recession worries."

Dr. John Glen, the chief economist at CIPS, commented on the situation, saying: "Higher borrowing costs are now a lasting reality, and the private sector is well aware of it. Interest-rate hikes are not only impacting new orders at present but also influencing spending plans far into the future. The most significant concern is no longer whether the UK economy will experience a recession, but rather how prolonged it might be."

However, amidst the negative developments, there was some positive news. Manufacturers reported a notable improvement in the time it took for their suppliers to deliver goods, reaching the fastest rate of improvement since January 1992, when records began. This indicates a normalization in supply chains, which has alleviated cost pressures for companies and allowed them to lower their prices for customers.

"The pieces of the puzzle for a supply-led reduction in inflation are coming together," Dr. Glen remarked. "Global supply chains are returning to their usual state after facing years of pandemic-related shortages and rising costs. Stocks of unused goods, accumulated to manage Brexit, the pandemic, and recent global shipping disruptions, are finally being depleted."

"Manufacturing input costs are declining, and supplier performance is improving at the most rapid rate we've ever witnessed. This revitalized supply-chain flexibility, coupled with decreasing raw material and transportation expenses, couldn't have arrived at a more opportune moment for businesses."