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Growth in the UK’s private sector was slower than expected in June, according to preliminary survey data, as the gulf between manufacturing and services continued to widen.
The latest S&P Global/CIPS UK flash composite purchasing managers’ index fell to 52.8 points in June, from 54.0 in May. Falling closer towards the 50-point no-change mark, it shows private sector growth slowed in Britain over the month.
The market had been expecting only a slight decline to 53.6, according to FXStreet-cited consensus.
The flash services PMI fell to 53.7 from 55.2, lower compared to market forecasts of 54.8.
‘Some survey respondents noted a loss of momentum for consumer spending, while others cited weaker demand from clients in the construction and real estate sectors,’ the survey read.
Survey respondents often linked growth in services to ‘resilient demand’ for business and financial services.
Meanwhile, the contraction in manufacturing worsened, with the PMI slipping to 46.2 from 47.1, which was also below forecasts of 46.8. Production levels fell due to ‘subdued’ underlying demand, as well as customer destocking.
S&P Global said the survey data highlighted the disparity of inflationary pressures across the two sectors. Factory gate charges saw an outright deduction for the first time in over seven years.
‘Materials became more plentiful as the supply chain difficulties of the last two years eased still further and significant disruption was left in the past resulting in the fastest fall in costs since February 2016,’ said John Glen, CIPS chief economist.
However, service providers saw a steep increase in average prices charged, and the rate of inflation only moderated slightly from the previous month. Reports of higher staff costs were widespread, with firms reportedly passing these on to their clients.
‘Wage demands contributed to another upward spiral in the costs of doing business. Almost 40% of service providers experienced higher business expenses in June as rising salary payments more than offset falling fuel and energy bills,’ Glen continued.
Job hiring in service sector companies continued to build momentum, while the decline in new jobs at factories worsened.
The composite PMI is a weighted average of the UK’s manufacturing and services PMIs, compiled by S&P Global from responses to surveys sent to 650 services companies and 650 manufacturers, with data collected between June 12 and 21.
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