Service sector

Services sector at worst point since Alpha variant lockdown, survey finds

The UK services sector has had its worst month since the Alpha variant of Covid-19 forced most of the country into lockdown 17 months ago.

A new survey has estimated that industry growth is at its lowest since February 2021 as the cost of living crisis forces customers to tighten their belts.

The monthly S&P Global/CIPS UK services PMI survey came in at 52.6 in July, from 54.3 a month earlier.

It still shows growth in the sector – anything above 50 is positive – but analysts expected better.

According to a consensus provided by Pantheon Macroeconomics, the score was expected at 53.3.

“UK service providers reported their worst month of business activity expansion since the nationwide lockdown in February 2021,” said Tim Moore, chief economics officer at S&P Global Market Intelligence.

Inflation and cost of living pressure have increased economic uncertainty for the sector, according to the report. As a result, they struggled to attract new business.

Meanwhile, businesses continued to face higher costs and charge customers more.

Fuel and utility bills have pushed up business costs both directly and indirectly, despite inflation falling from recent highs in May and June.

“The most encouraging development in July was a considerable slowdown in input cost inflation from the previous month, likely reflecting lower commodity prices and a gradual easing of global supply shortages,” Mr. Moore.

“The overall cost burden increased to the smallest extent seen so far in 2022, despite numerous reports of pressure on operating expenses from rising fuel bills and staff salaries. .”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “A period of relative stability in terms of supply chain disruption was also a positive, according to survey respondents.

“However, after the scramble to regain the highs in activity during the Covid rebound lost momentum, the UK market will need to improve much further to avoid a prolonged summer of discontent.”