Latest Markit/CIPS Purchasing Managers’ Index® (PMI®) for services shows recent recovery is beginning to slow amongst fears of the impact of impending austerity measures.
June saw the largest ever drop in confidence in the sector and new business was registered as increasing at a slow pace, yet charges increased at strongest pace for 20 months. June's data posted as 54.5, down from May's 55.4.
Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said:
“June’s data painted a worrying picture for the UK services sector as confidence suffered a serious blow following the Government’s emergency spending cuts. Purchasing managers voiced grave concerns that budget cuts and VAT rises will tip the scales and amplify the likelihood of the UK slipping back into recession.
“Though new business continued to grow this was at a subdued rate and kept employment levels firmly grounded. It seems that companies are increasingly hesitant to commit in this time of political and economic uncertainty.
“This muted tone was further dampened as growing competition and a drive to keep profit margins tight meant inflationary pressures weren’t fully passed on to clients.”
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