Fastest expansion of UK service sector activity for five years
Fastest expansion of UK service sector activity for five years in July, According to the latest IHS Markit / CIPS Flash UK Services PMI....
- Headline index reaches 56.5, up sharply from 47.1 in June
- New work returns to growth in July amid reopening boost
- Business optimism improves for the fourth month in a row
According to the latest IHS Markit / CIPS Flash UK Services PMI.....
"UK service providers reported a strong increase in business activity during July, with the rate of growth the sharpest recorded for five years. New orders also rebounded during the latest survey period, reflecting an improvement in corporate and household spending. Growth was mainly linked to the phased reopening of business operations across the UK economy.
Employment was a weak point in July, with staffing numbers falling at a steep and accelerated pace amid concerns of only a partial recovery in longer-term demand from the levels seen prior to the coronavirus disease 2019 (COVID-19) pandemic. At 56.5 in July, the headline seasonally adjusted IHS Markit/CIPS UK Services PMI® Business Activity Index picked up from 47.1 in June and signalled the fastest pace of expansion since July 2015. The index has risen in each month after reaching a survey-record low of 13.4 in April, but the latest reading was the first to exceed the neutral 50.0 threshold since the pandemic began."
Around 38% of the survey panel reported an increase in business activity during July, while only 24% signalled a decline. The proportion of service providers reporting output growth had previously risen from just 7% in April to 13% in May and 28% in June. Higher levels of business activity were overwhelmingly linked to the easing of lockdown measures and subsequent increase in customer demand. However, survey respondents often noted that output had simply risen from an extremely low base and would take a long time to recover to pre-pandemic levels.
New business volumes meanwhile increased for the first time in five months and at the fastest pace since January. Growth was mostly attributed to reopened business operations and a return of clients from furlough. Service providers nonetheless also commented on project cancellations and subdued underlying demand as businesses and households sought to rein in non-essential spending. In contrast to the positive trend for total new work, international travel restrictions at home and abroad contributed to a sustained reduction in new export sales during July."
"UK service providers reported a strong increase in business activity during July, with the rate of growth the sharpest recorded for five years. New orders also rebounded during the latest survey period, reflecting an improvement in corporate and household spending. Growth was mainly linked to the phased reopening of business operations across the UK economy.
Employment was a weak point in July, with staffing numbers falling at a steep and accelerated pace amid concerns of only a partial recovery in longer-term demand from the levels seen prior to the coronavirus disease 2019 (COVID-19) pandemic. At 56.5 in July, the headline seasonally adjusted IHS Markit/CIPS UK Services PMI® Business Activity Index picked up from 47.1 in June and signalled the fastest pace of expansion since July 2015. The index has risen in each month after reaching a survey-record low of 13.4 in April, but the latest reading was the first to exceed the neutral 50.0 threshold since the pandemic began."
Around 38% of the survey panel reported an increase in business activity during July, while only 24% signalled a decline. The proportion of service providers reporting output growth had previously risen from just 7% in April to 13% in May and 28% in June. Higher levels of business activity were overwhelmingly linked to the easing of lockdown measures and subsequent increase in customer demand. However, survey respondents often noted that output had simply risen from an extremely low base and would take a long time to recover to pre-pandemic levels.
New business volumes meanwhile increased for the first time in five months and at the fastest pace since January. Growth was mostly attributed to reopened business operations and a return of clients from furlough. Service providers nonetheless also commented on project cancellations and subdued underlying demand as businesses and households sought to rein in non-essential spending. In contrast to the positive trend for total new work, international travel restrictions at home and abroad contributed to a sustained reduction in new export sales during July."
See the latest IHS Markit / CIPS UK Services PMI here commented by Tim Moore, Economics Director at IHS Markit, and Duncan Brock, Group Director at CIPS.