UK Service Sector Growth Weakens On Softer Orders

(RTTNews) - The UK service sector continued to expand in June but the upturn moderated as rising interest rates and economic uncertainty weighed on consumer demand, final survey results from S&P Global showed on Wednesday.

The final Chartered Institute of Procurement & Supply services Purchasing Managers' Index dropped to 53.7 in June, as estimated, from 55.2 in May. The score signaled a slowdown in service sector output growth to the weakest since March. New orders increased at the slowest pace since the current period of growth began in February. Service providers delayed their purchasing decisions due to the uncertainty surrounding the economic outlook and the impact of higher borrowing costs.

Meanwhile, new work from abroad grew at the fastest pace in three months, reflecting higher demand from the US and European clients.

Employment increased for the sixth straight month in June. The rate of job creation rose at the fastest pace since September 2022.

Input costs continued to increase in June but the overall rate of inflation eased for the first time in three months. Higher salary payment was the major reason for the increased cost burdens.

Prices charged by service providers increased at a slower pace on weaker cost pressures in June. Further, service providers were upbeat about their growth prospects, but the degree of optimism was the lowest since January.

"With the UK economy still a hair's breadth away from recession, companies will be making modest plans for future business this year rather than for the highs experienced in the last few months," CIPS Chief Economist John Glen said.

The composite output index that combines the performances of manufacturing and services sectors signaled the slowest pace of growth since March. The composite PMI posted 52.8 in June, down from 54.0 in May. The score matched the flash estimate.