UK services 'come off the boil'

Will Green is news editor of Supply Management
5 September 2017

Growth in the UK services sector slowed in August against a background of fragile business confidence, according to the latest PMI.

The IHS Markit/CIPS UK Services Purchasing Managers’ Index slipped to 53.2 in August, down on 53.8 in July and against the neutral reading of 50, which indicates neither contraction nor expansion.

New order volumes increased at the second-slowest rate since September 2016 and survey respondents noted subdued client demand and heightened uncertainty about the domestic economic outlook.

The survey also highlighted stronger cost pressures in the sector, with the rate of input price inflation the fastest since February. Higher staff costs, fuel bills and prices for imported items contributed to an increase in average prices charged by service providers.

Duncan Brock, director of customer relationships at CIPS, said: “A slowdown month as the services sector comes off the boil, challenged by a general unwillingness to spend and invest, alongside fragility in confidence among consumers as a result of Brexit.”

Chris Williamson, chief business economist at IHS Markit, said: “In services, the weaker growth trend was most evident in consumer–facing sectors such as hotels and restaurants and other personal services, which includes businesses such as cinemas, gyms and hairdressers.

“The overall level of optimism also remained subdued, mainly linked to Brexit uncertainty, close to levels that have previously been indicative of the economy stalling or even contracting.”

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