The UK’s new business index jumped from 51.6 in June to 54.9 in July after companies saw a surge in demand from international markets, including Europe, North America and Asia. A reading over 50 signifies growth, and anything below it signals contraction.
UK business confidence also jumped to a five-month high after the decisive election result brought a much greater degree of certainty over the direction of government policy.
This was in stark contrast to France, where overseas contracts shrank in July, largely offsetting an economic boost from the Olympics.
French business confidence slumped to the lowest level this year as companies warned the effect from the games would soon be lost. German business activity also fell for the first time since March, becoming a “new drag” on the Eurozone economy.
In the UK, Joe Hayes, Principal Economist at S&P Global Market Intelligence, said: “Firms reported an influx of new clients and contracts. July’s accelerated expansion in sales activity crucially suggests business and consumer confidence has improved.”
The overall index of UK services climbed from 52.1 in June to 52.5 in July, after the general election on July 4. This was the first time since April that the UK services sector has accelerated.
This was significantly higher than in France where the services index rose to 50.1, only just above the 50 no-change benchmark despite the Olympics and the end of France’s own snap election period.
Unlike in the UK, no party won an absolute majority in the French election, meaning businesses have warned of more uncertainty.
In Germany, the services index cooled for the second month in a row, slowing from 53.1 in June to 52.5 in July, as international orders dipped.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, warned that the prospect of recession is looming again in Germany as the country needs particularly strong services growth to offset the country’s manufacturing downturn.
Dr de la Rubia said: “Growth could keep slowing down in the next few months. New business only grew a little in July, and outstanding business has been dropping almost continuously since mid-2023. If the service sector stalls, the whole economy could slip into a recession because manufacturing continues to shrink sharply.”
The slowdown in growth in Germany meant overall private sector activity in the Eurozone dropped from 50.9 to a five-month low of 50.2 in July.