UK services sector grows for 31st month in a row

Paul Snell is managing editor at Supply Management
5 August 2015

The UK services sector continued its rapid expansion in July, albeit at a slightly slower pace than in June.

Activity in the Markit/CIPS UK Services Purchasing Managers’ Index (PMI) recorded a figure of 57.4 last month, which was lower than the 58.5 reported in June, but still indicated expansion in the sector as the figure was above the no-change mark of 50.

It was the 31st consecutive month of growth for the industry, although July’s activity was weaker than the average seen in both the first and second quarters of 2015. “Unexpected” new contract wins, new product launches, acquisitions, organic growth and effective marketing were all factors in the sector’s expansion. New business was at its highest level seen since April.

While companies continued to increase their workforces, job creation in the sector was the slowest since March 2014. Rises in IT and regulatory costs and higher rents pushed up input prices, but inflation eased to its lowest in three months.

David Noble, group CEO, CIPS, said: “Though dislodged from last month, the sector’s growth continued to operate on solid foundations and in an optimistic environment.”

Markit’s chief economist Chris Williamson said: “A deterioration in service sector growth is the latest in a stream of signals that the economy has slowed as we move into the second half of the year.

“The fall in the services PMI follows signs of ongoing weakness in manufacturing and a renewed slowing in the construction sector. If financial services providers had not seen the fastest growth since 2013, the fall in the survey would have been even sharper, with slower rates of expansion recorded in all other services sub-sectors. The huge business services sector, ranging from architects to accountants, reported the weakest rate of expansion for almost three years.”

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