UK business activity growth edges up to a nine-month high

According to the report from IHS Markit/CIPS, July data signalled a slight improvement in the performance of the UK service sector, with a renewed increase in new work supporting the fastest pace of business activity growth since October 2018. However, the rate of expansion remained subdued overall and much softer than seen on average over the past decade. Meanwhile, job creation softened in July and business expectations for the year ahead eased to the weakest since March.

At 51.4 in July, the seasonally adjusted UK Services PMI Business Activity Index registered above the 50.0 no-change mark for the fourth consecutive month and signalled a modest increase in service sector output. The latest reading was up from 50.2 in June and the highest for nine months, but still well below the trend recorded since the recovery from the global financial crisis began in the second half of 2009 (54.4).

Higher levels of business activity were driven by a solid rebound in new work during July. The rate of new business growth was the strongest since September 2018. There were again widespread reports that domestic political uncertainty had held back decision making among clients, particularly large corporates. A number of survey respondents commented on improved sales to clients in external markets, helped by the weak sterling exchange rate against the euro and US dollar. Moreover, the latest survey indicated the fastest increase in new work from abroad since June 2018.