UK services growth cools to six-month low in July: PMI
2023.08.03 05:30
© Reuters. FILE PHOTO: Waitresses work as people sit inside a restaurant, amid the outbreak of the coronavirus disease (COVID-19), in Chinatown, London, Britain, 18 May 2021. REUTERS/Hannah McKay/File Photo
LONDON (Reuters) – Growth across British services companies slowed last month to its lowest level since January, a business survey confirmed on Thursday ahead of the Bank of England’s interest rate decision.
The final reading of the UK S&P Global (NYSE:) Services Purchasing Managers’ Index (PMI) fell in July to 51.5 from 53.7 in June, unchanged from a preliminary “flash” reading. Readings above 50 denote growth.
The survey mirrored other gauges of the economy that point to a stagnating economy, held back by high inflation and rising borrowing costs, although it has so far dodged a recession that many economists predicted late last year.
The BoE closely watches the PMI. Although businesses said costs and selling prices fell in July, S&P Global noted higher salary payments were a continued source of upward pressure – something the central bank’s officials are likely to note.
Economists polled by Reuters expect the BoE will raise interest rates later on Thursday to a new 15-year high of 5.25%, up from 5% now.
“The loss of momentum signalled by service providers in July suggests that the UK economy is set to flatline at best in the coming months as higher borrowing costs take a bigger toll on consumer spending and business confidence,” S&P Global economics director Tim Moore said.
“Service sector companies saw the weakest rise in new work for six months, while job creation slipped as some firms responded to softer market conditions by putting the brakes on hiring.”
The composite PMI, which combines Thursday’s services PMI with the manufacturing PMI published on Tuesday, fell in July to 50.8 from 52.8 in June – the lowest reading since January but revised up marginally from a flash reading of 50.7.
