Business activity returned to growth last month after warm weather and the World Cup helped boost consumer spending, according to new figures.
The latest business trends report by advisory firm BDO showed that activity strengthened, but highlighted that business confidence is still “subdued”.
It indicated that a longer-term recovery is therefore “unlikely to be sustained” without Government support.
BDO’s output index rose to a 95.29 reading in July, up from 93.41 in June.
It therefore the surpassed the 95 point level needed to signify growth, with a reading below that level pointing to a contraction for the month.
The research showed that the rebound was largely driven by the services sector, with hospitality and retail benefiting from increased domestic tourism, as well as a World Cup uplift.
Experts also suggested that there an initial “Burnham bounce” during the month after Andy Burnham’s appointment as Prime Minister contributed to a modest rebound in business optimism.
The report’s business confidence metric rose to 89.96 for the month from 88.45 in June, which had represented a five-year low.
Meanwhile, confidence in the manufacturing sector weakened in July as businesses continued to come under pressure elevated costs and supply chain uncertainty amid the conflict in the Middle East.
Scott Knight, head of growth at BDO, said: “There’s nothing quite like a summer of sun and football to give a boost to the economy, but sadly it can’t last forever.
“Without greater certainty around the Government’s economic policies and a reduction in geopolitical tensions, any improvement is likely to be temporary, seasonal and short-lived.”