By Jonathan Davies
The growth of the UK’s services sector slowed down slightly in July, but remained at a strong pace, according to a closely watched survey.
The Markit/CIPS purchasing managers’ index (PMI) fell from 58.5 in June to 57.4. Any figure above 50 indicates growth.
The services sector accounts for around 70% of UK GDP.
Markit said business activity growth remained sharp and was in line with the trend of the past two-and-a-half years. New business grew at a faster pace and growth of outstanding business resumed following a decline in June. There was more disappointing figures in job creation, however. Although businesses employment continued to grow, it rose at a slower rate.
Markit said that many of those businesses that reported increased activity said that it was as a result of new contracts, product launches, acquisitions and marketing campaigns. Intriguingly, it said that some weren’t expecting to see a rise in activity.
Chris Williamson, chief economist at Markit, 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.
“Despite the dip in the PMI in July, the service sector continues to act as the main driver of economic growth. The survey data point to GDP growth merely easing from 0.7% in the second quarter to a still-impressive 0.6% at the start of the third quarter, which will do little to deter hawks at the Bank of England from voting for higher interest rates.”