UK service companies slow again, less price pressure – PMI

Written by waploaded

by William Schomberg

LONDON (Reuters) – British services sector activity grew in July at the slowest pace since early 2021, when the country was under coronavirus lockdown, although rising price pressures eased, a survey showed on Wednesday.

The S&P Global/CIPS UK Services Purchasing Managers’ Index (PMI) slipped to 52.6, a 17-month low from 54.3 in June and lower than July’s initial estimate of 53.3 as the economy slipped to near double-digit inflation. was fighting under.

The combination of a slowing economy and price hikes to a 40-year high is raising the stakes for the Bank of England, which will announce its next interest rate decision on Thursday.

It is set to raise borrowing costs for the sixth time since December, possibly by half a percentage point in what would be its biggest increase since 1995.

“Efforts by businesses to control spending due to low levels of discretionary consumer spending and rising inflation have dampened demand,” said Tim Moore, economics director at S&P Global Market Intelligence.

Costs, while still rising rapidly by historical standards, rose at least since December and the increase in prices charged by firms was the smallest in five months.

“Any slowdown in inflationary pressures may not come soon enough for service providers, with many firms reporting increasing customer resistance to price hikes and declining demand,” Moore said.

Firms continued to persevere despite struggling to find suitable candidates and worrying about inflation and high interest rates. There has been only a slight improvement in new trade from the 16-month low of June.

S&P Global’s Composite Purchasing Managers’ Index – covering services and manufacturing firms, fell to 52.1 – the lowest since February 2021 – from June’s 53.7.

The weakening economy is a central theme in the race to replace Prime Minister Boris Johnson, with leading contender Liz Truss promising immediate tax cuts, while former finance minister Rishi Sunak says reducing inflation is his first priority.

(Written by William Schomberg; Editing by Hugh Lawson)