UK Service Sector Recovery Slows In July
UK service sector activity grew at the slowest pace since the end of the winter lockdown as staff shortages and supply issues weighed on business capacity, final survey results from IHS Markit showed on Wednesday.
The Chartered Institute of Procurement & Supply services Purchasing Managers’ Index declined to 59.6 in July from 62.4 in June. The index was the lowest since March.
Nonetheless, the score was above the crucial 50.0 no-change mark and also above the flash reading of 57.8.
Staff shortages, supply chain issues and the end of the full stamp duty holiday for residential property sales were cited as factors leading to a slowdown since June.
There was a substantial loss of momentum in new business growth in July. Meanwhile, new export orders returned to growth, helped by looser pandemic restrictions in overseas markets.
Backlogs of work increased for the fifth successive month. Job creation continued at a brisk pace in July, reflecting strong demand for staff across the service economy. But the rate of growth slipped to a three-month low.
Input price inflation rose to a record high in July on wage pressures, higher fuel prices and greater transport bills.
A combination of rising input prices and stronger demand meant that service providers increased their average charges at a survey-record pace in July.
The latest survey suggested that service sector companies remained highly upbeat about their growth prospects for the year ahead. However, the degree of confidence slipped for four months in a row.
The overall private sector activity grew at the weakest pace in four months in July. The composite output index dropped to 59.2 in July from 62.2 in June. The flash reading was 57.7.
Any re-acceleration of growth in August looks unlikely, however, as new orders increased at a much-reduced pace at the start of the third quarter, Tim Moore, an economics director at IHS Markit, said.
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