UK services PMI drops to 53.5 in July, 3-month lows

The services sector activity in the UK economy stalled its upturn and deteriorated in the month of July, missing the consensus forecast by a big margin, a fresh report from Markit Economics showed on Friday.

The services PMI jumped to 53.5 in July versus a 55.1 reading booked in June. Markets predicted 54.7 last month.

Key Points:

Business activity rises at the slowest pace since April.  

The rate of job creation weakest since August 2016.

Inflationary pressures moderate in July.

Tim Moore, Associate Director at IHS Markit, which compiles the survey, noted:

“The service sector moved back into the slow lane in July as business activity growth lost momentum for the first time since the start of spring. While it’s difficult to quantify the precise impact of the recent heat wave on overall business performance, some survey respondents reported that a combination of hot weather and the World Cup had weighed on consumer footfall. These short-term disruptions and a general slowdown in new business growth appear to have offset the boost to tourism-related activity from the extended dry period in July.”

“Looking at demand fundamentals, service providers commented that Brexit uncertainty had held back new project wins, reflecting risk aversion and a wait-and-see approach to investment spending among international clients.”