UK Service Sector Moves Closer To Stagnation
03 Juli 2019 - 10:13AM
RTTF2
UK service sector activity moved closer to stagnation in June on
subdued client demand and a further reduction in work-in-hand, data
from IHS Markit showed Wednesday.
The IHS Markit/Chartered Institute of Procurement & Supply
services Purchasing Managers' Index fell to 50.2 in June from 51.0
in May. This was the lowest reading for three months. Economists
had forecast the score to remain unchanged at 51.0.
The reading was only fractionally above the 50.0 no-change mark
and therefore signaled that business activity was close to
stagnation in June, IHS Markit said.
The weakness in activity was attributed to sluggish domestic
economic conditions and greater risk aversion in response to Brexit
uncertainty.
New business showed a fractional decline in June. Nonetheless,
jobs growth has been recorded in three of the past four months as
respondents often link recruitment to long-term business expansion
plans.
Service providers remained optimistic overall about their growth
prospects for the year ahead, but the degree of confidence weakened
in June.
Strong input price inflation was seen in June due to higher
transportation costs and wage pressures. However, prices charged by
service providers advanced at the second-slowest rate since June
2017.
The composite PMI showed a contraction in the private sector as
the marginal increase in services was offset by marked declines in
manufacturing and construction output.
The all sector output index fell to 49.2 in June from 50.7 in
May. The indicator signaled a reduction in overall private sector
business activity for the first time in 35 months.
Andrew Wishart, an economist at Capital Economics, said overall,
the economy clearly lost momentum in the second quarter after the
pre-Brexit boost in the first quarter. But the economist is more
worried that the underlying trend has weakened too.
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