Services PMI completes ‘triple dose of muted results’
Growth in the UK services sector slowed in June, caused by uncertainty and a lack of business optimism, according to the latest PMI.
Last month saw the slowest increase in new business since September, and buyers surveyed reported subdued business and consumer confidence as well as delays in decision-making because of the general election.
Anecdotally Brexit related risk aversion and economic uncertainty were said to be holding back customer spending.
The IHS Markit/CIPS UK Services PMI slowed to 53.4 last month, above the no-change score of 50 but slightly lower than May’s score of 53.8. June saw the sector’s lowest score since February.
Duncan Brock, director of customer services and relationships at CIPS, said the results did not come as a surprise and completed the “triple dose of muted results”. All three PMI indicators, for services, manufacturing and construction, slowed last month.
“Strong growth in new orders and overall activity was destabilised by a reduction in business optimism, which fell to one of the lowest levels since 2011,” he said. “At this stage it’s hard to tell if this is a sign of things to come or if this lack of enthusiasm is just a temporary response to increasingly tough trading conditions.”
Brock added that growing competition in the sector meant companies could not pass on cost increases to their customers, placing intense pressure on margins. Rising salaries and raw material prices, particularly for food and imports, contributed to the inflationary pressure.
Job creation was the only indicator to buck the trend, rising to its fastest for 14 months.