UK services growth cools, but by less than first feared, PMI shows
2024.07.03 05:06
(Reuters) – Growth across Britain’s services companies slowed by less than first thought in June but it still ebbed to a seven-month low, according to a survey on Wednesday that pointed to modest economic growth momentum for the incoming government.
The S&P Global UK Services Purchasing Managers Index fell in June to 52.1 from 52.9 in May, its lowest reading since November but revised up from a preliminary estimate of 51.2.
Data provider S&P Global linked the slowdown to companies taking a “wait-and-see” approach to the outcome of Britain’s July 4 national election. Opinion polls show the opposition Labour Party is set to win, possibly with a record-breaking majority.
“We are seeing some evidence of a pre-general election seize-up across the UK services economy,” said Joe Hayes, principal economist at S&P Global Market Intelligence.
The economy looked on course for another quarter of growth albeit probably slower than the 0.7% expansion registered in the three months to March, Hayes said.
Costs paid by services companies, watched by the Bank of England as a gauge of inflation pressure, fell to their lowest level since February 2021 – something that could give the central bank more confidence to cut interest rates in the coming months.
“The direction of travel here is encouraging for the Bank of England, but our survey’s gauge of prices charged actually rose on the month as some companies noted their pricing power was strong enough to raise their fees,” Hayes said.
The composite PMI – which combines the services data with Monday’s manufacturing survey – fell in June to 52.3 from 53.0 in May, its lowest reading since December but again revised up from a flash estimate of 51.7.
