UK service providers reported a faster growth in activity in June despite cost of living concerns and a weak economic outlook, final data from S&P Global showed on Tuesday.
The headline S&P Global/Chartered Institute of Procurement & Supply final services Purchasing Managers’ Index registered 54.3 in June. The flash score was 53.4, unchanged from May.
The score remained above the 50.0 no-change mark for the sixteenth month running.
Orders grew at the smallest extent since February 2021 as higher inflation and worries about the economic outlook weighed on demand. Meanwhile, export sales grew at the strongest pace since February.
Data pointed to a robust rate of job creation across the service economy. Survey respondents cited severe difficulties in recruitment and retention.
The survey showed that input cost inflation rose at the second-fastest rate since the survey began in July 1996. Average prices charged by service providers continued to rise at a rapid pace in June, with the rate of inflation only fractionally lower than May’s record high.
Output growth expectations across the service economy continued to moderate in June. The degree of positive sentiment regarding year-ahead prospects was the lowest since May 2020.
The composite output index came in at 53.7 in June, up slightly from 53.1 in May but still the second-weakest reading so far this year. The flash score was 53.1.
A slowdown in manufacturing production growth to its lowest since May 2020 was offset by a moderate acceleration in service sector activity.
The relative calm demonstrated by the slight uplift in the headline figure belies the underlying picture of businesses weighed down by rising costs, the struggle to build operating capacity and a shortage of raw materials caused by war and continuing supply chain disruption, Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said.
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