UK Service Sector Growth Slows to Four-Month Low

Source: Markit Economics

The United Kingdom’s service sector growth decelerated to a four-month low in July, dragged by shortages in the workforce and supply chain issues.

• The headline seasonally adjusted IHS Markit/CIPS UK Services PMI stood at 59.6 in July, lower than 62.4 in June, and the lowest since March.
• The slowdown was attributed to staff shortages, supply chain issues, and the end of the full stamp duty holiday for residential property sales.
• The new business growth was the lowest since February, as COVID-19 quarantine restrictions dampened sales volumes.
• New export orders rebounded with the fastest growth since June 2018, as overseas markets eased restrictions.
• Work backlogs increased for the fifth straight month due to staff shortages given the isolation rules, and supply issues.
• Overall inflation was the steepest since the series started 25 years ago, as providers increased their average charges at a record pace during the month.
• IHS Markit Economics Director Tim Moore believes any re-acceleration of growth in August is unlikely, as new orders grew at a slower pace.
• Moore said more firms are reporting growth constraints due to supply issues, while on the demand side pent-up consumer spending has already peaked.