(Sharecast News) – Activity in the UK services sector slowed down last month as expected amid “persistent” increases in input costs, the results of a closely followed survey revealed.
However, average prices charged by companies were among the weakest since the summer of 2021.
S&P Global’s services sector Purchasing Managers’ Index fell from a reading of 53.7 in June to 51.5 for July, confirming a preliminary estimate.
Companies reporting rising output mostly linked it to household spending on travel and leisure holding up.
And firms’ expectations for business activity in the year ahead were positive with 48% of panellists anticipating higher output, versus just 12% expecting declines.
“The loss of momentum signalled by service providers in July suggests that the UK economy is set to flatline at best in the coming months as higher borrowing costs take a bigger toll on consumer spending and business confidence,” said Tim Moore, economics director at S&P Global Market Intelligence.
“Survey respondents widely commented on strong cost pressures due to higher salary payments in July, which will add to concerns among policymakers that sticky inflation and stagnant growth will prove a persistent challenge for the UK economy during the second half of the year.”