The headline services Purchasing Managers’ Index dropped to 51.8 in July from 52.8 in June. The score has remained above the neutral 50.0 mark for the third straight month and also above the initial estimate of 51.2.
Total new work contracted at the fastest pace since November 2022. Export sales also declined in July, which was linked to fragile global economic conditions and elevated geopolitical tensions.
There was a solid reduction in staffing in July. Respondents cited hiring freezes and redundancies in response to subdued demand and robust input cost inflation.
Input price inflation moderated to its lowest so far this year. Meanwhile, prices charged inflation accelerated as service providers passed through some of the recent rise in their payroll costs.
Sentiment improved in July to the second highest since October 2024 despite a range of domestic economic headwinds.
Overall private sector growth moderated in July from a nine-month high. The composite output index fell to 51.5 from 52.0 in June. The flash reading was 51.0.
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Story Highlight
– UK service sector growth softened in July.
– Services PMI dropped to 51.8 from 52.8.
– Total new work contracted at fastest pace since November.
– Staffing reduced due to subdued demand and inflation.
– Improved sentiment noted despite domestic economic challenges.
Full Story
The growth of the UK service sector experienced a decline in July, as new business orders retreated, according to a report released by S&P Global on Tuesday. The services Purchasing Managers’ Index (PMI) slipped to 51.8, down from 52.8 the previous month, although it remained above the neutral threshold of 50.0 for a third consecutive month and surpassed the initial estimate of 51.2.
The latest figures indicate that total new work contracted at the sharpest rate since November 2022, compounded by a fall in export sales attributed to fragile global economic conditions and heightened geopolitical tensions. There was a notable reduction in staffing levels during July, with survey respondents mentioning hiring freezes and redundancies as businesses responded to weakened demand and persistent inflation in input costs.
While input price inflation eased to its lowest level this year, the rate of inflation for prices charged by service providers saw an uptick, as they began to transfer some of the increased payroll expenses to customers.
Despite facing several domestic economic challenges, overall sentiment within the sector improved, reaching its second highest level since October 2024. The overall private sector growth also slowed from a nine-month peak, with the composite output index declining to 51.5 from 52.0 in June, with the flash estimate sitting at 51.0.
