UK’s Service Sector Growth Loses Momentum In June  

• June data indicated a sustained upturn in UK service sector output, but the rate of expansion eased to its weakest for three months amid a much softer rise in new orders. In contrast, staffing levels expanded at the fastest pace since last September as improving candidate availability helped to boost recruitment.
• Service providers recorded another sharp increase in their average cost burdens. Rising salary payments offset falling energy and transportation bills. However, the latest overall rise in business expenses was the weakest for just over two years. Prices charged by service companies meanwhile increased at the second-slowest pace since August 2021.
• At 53.7 in June, down from 55.2 in May, the headline seasonally adjusted S&P Global / CIPS UK Services PMI® Business Activity Index signalled a slowdown in service sector output growth to its weakest since March. The latest index reading marked five months of continuous business expansion across the service economy.
• Survey respondents typically noted resilient business and consumer spending, despite pressure on budgets from elevated inflationary pressures. However, there were several reports citing weak demand from clients in the real estate and construction sectors, largely due to rising interest rates.
• Employment numbers increased for the sixth consecutive month in June. The rate of job creation accelerated to its fastest since September 2022. Service providers widely noted that vacancies had become easier to fill. Additional staff recruitment helped to boost business capacity and in turn, resulted in an overall reduction in backlogs of work for the first time since January.

 

(Source: S&P Global)