Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The UK services sector's growth slowed in August, as sales took a hit from growing economic uncertainty and reduced client confidence.
The headline seasonally adjusted S&P Global/Chartered Institute of Procurement UK services purchasing managers' index business activity index fell to 50.9 points in August from 52.6 in July.
Any mark above 50.0 indicates growth.
Despite being in growth territory, the print came in well short of market expectations, according to FXStreet, of 52.5.
S&P Global noted August's reading is the softest in 18 months.
‘UK private sector business activity fell for the first time in a year-and-a-half in August as an increasingly severe downturn in manufacturing was accompanied by a near-stalling of the vast services sector,’ said Chris Williamson, chief business economist at S&P Global Market Intelligence.
‘Demand for consumer facing services such as restaurants, hotels, travel and other recreational activities is collapsing under the weight of the cost-of-living crisis, with demand for business services also coming under pressure amid concerns over rising costs and the darkening economic outlook. Financial services firms are meanwhile reporting subdued trading amid the recent hikes in interest rates, adding to an increasingly broad-based malaise across the economy.’
The labour market saw ‘notable resilience’, S&P Global said.
‘Although staffing levels rose at a slower rate, growth remained marked as firms responded to higher workloads and continued to plug previously unfilled vacancies,’ it added.
With the drop in the services sector and a sharp drop in the performance from the manufacturing sector, the composite PMI fell below the crucial 50.0 mark, hitting its lowest point in 18 months.
The seasonally adjusted S&P Global/CIPS UK composite PMI dropped to 49.6 in August from 52.1 in July. Market consensus seen the composite number at 50.9.
Last Thursday, data showed the S&P Global/CIPS manufacturing purchasing managers' index fell to 47.3 points in August from 52.1 in July.
Williamson added: ‘Although the survey data are currently consistent with the economy contracting at a modest quarterly rate of 0.1%, deteriorating trends in order books suggest the incoming prime minister will be dealing with an economy that is facing a heightened risk of recession, a deteriorating labour market and persistent elevated price pressures linked to the soaring cost of energy.’
The services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 650 service sector companies. The data was collected between August 12 to 26.
Copyright 2022 Alliance News Limited. All Rights Reserved.