UK services sector growth accelerates in July

5th Aug 2024 10:18

(Sharecast News) - Growth in the UK services sector accelerated in July, with the strongest upturn in demand since May 2023, according to a survey released on Monday.

The S&P Global services PMI business activity index edged up to 52.5 from 52.1 in June, coming in a touch higher than the flash estimate of 52.4 and marking the first time since April that growth has accelerated.

A reading above 50 indicates expansion, while a reading below signals contraction.

Joe Hayes, principal economist at S&P Global Market Intelligence, said: "With the general election period coming to an end at the start of July, survey data for last month showed the UK service sector enjoyed a modest rebound after a fairly subdued end to Q2. The business activity index crept up only slightly, but the new business index jumped by over three points to its highest level in 14 months as firms reported an influx of new clients and contracts.

"July's accelerated expansion in sales activity crucially suggests business and consumer confidence has improved, and albeit only one month into the second half of 2024, the latest survey results bode well for a reasonable GDP growth print in Q3.

"Still, there continues to be sluggish progress on inflation. The positive takeaway is that price pressures, both regarding input costs and output prices, are at their lowest since early 2021. The concern, however, will be that the respective PMIs are still well above their pre-pandemic trends, and these are the benchmarks for the Bank of England to hit before claiming the fight against inflation is over."