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The UK services sector expanded at the slowest pace in 17 months, amid meek new business despite firms stepping up hiring, a survey on Wednesday showed.
The latest S&P Global/CIPS UK services purchasing managers' index faded to 52.6 points in July, from 54.3 in June.
The tracker has registered above the 50.0 no change mark for 17 months in-a-row, though the latest PMI figure was the weakest since February 2021.
‘UK service sector activity growth eased to its slowest in the past 17 months during July as inflationary pressures and the cost-of-living squeeze resulted in heightened economic uncertainty. New business gains were limited as a result. Both operating expenses and average prices charged continued to rise at elevated rates, despite inflation easing considerably since June. Meanwhile, confidence about the future remained at an historically subdued level,’ S&P Global said.
New business growth was slightly improved from June's low, but was still weak.
Employment rose ‘markedly’, meanwhile, S&P Global said.
‘More positive news was the continued strength of the labour market, with jobs again added at a strong pace. That was despite continued challenges in the recruitment of suitably qualified staff,’ it explained.
The composite PMI similarly weakened, declining to 52.1 points in July from 53.7 in June. It was the slowest rate of expansion since February 2021.
‘UK private sector firms signalled another steep rise in their average cost burdens during July, but the pace of inflation moderated to a ten-month low. Softer input price pressures and subdued customer demand contributed to the least marked rise in average prices charged since February,’ S&P Global said.
The composite figure is compiled using a weighted average of the services and manufacturing data, the latter was reported earlier this week.
The manufacturing PMI fell to 52.1 points in July, from 52.8 in June. Though remaining above the 50.0 no change mark, the PMI hit its weakest level in over two years.
The services survey features a panel of 650 firms. Responses were collected in the second half of the month.
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