UK Services Sector Contracts Fastest Since Jan 2023 as Demand Falls and Costs Rise
Updated
Updated · IBTimes UK · Aug 15
UK Services Sector Contracts Fastest Since Jan 2023 as Demand Falls and Costs Rise
3 articles · Updated · IBTimes UK · Aug 15
Summary
Britain’s services sector shrank at its fastest pace since January 2023, the latest S&P Global/CIPS PMI showed, signaling a sharper loss of momentum in the part of the economy that makes up about 80% of output.
Falling domestic demand, softer export orders and weaker client confidence drove the pullback, while higher wage bills, National Insurance contributions, energy costs and borrowing expenses squeezed margins.
Consumer-facing industries including hospitality, leisure and retail were hit as elevated mortgage, utility and food costs kept households focused on essentials, forcing more businesses to lean on promotions and discounts.
The weakness points to slower hiring, fewer vacancies and weaker investment if it persists, even though official data showed GDP rose 0.1% in May and 0.7% over the three months to May.
That split between modest GDP growth and deteriorating business surveys underscores a fragile UK recovery, with economists warning growth could remain uneven through the rest of the year.