UK services activity lowest since 2009. The pound declined

The UK economy opened the third quarter on a weak footing. Output and new orders both fell for the first time since the end of 2012, while service providers' optimism about the coming 12 months slumped to a seven-and-a-half year low. The headline Markit Flash UK Composite Output Index - which is compiled using the same methodology as Flash PMI data published for the euro area, the United States and Japan - fell to 47.7 in July, its lowest reading since April 2009. Data were collected between July 12-21. The weaker performance of the UK economy during July was especially striking when looking at the month-on-month movements in the index levels. The Composite Output and the Composite New Orders indices fell by 4.7 and 6.8 points respectively since June, the steepest drops registered in the series histories. The 10.4 point decline in the Services Business Expectations Index was also the largest on record. Output and new orders fell in both the manufacturing and service sectors during July. A number of firms linked this to ongoing uncertainty pre- and post-EU referendum, with reports especially prevalent among service providers. The downturn in services was also more marked than that seen in manufacturing. Services activity and new orders both fell at the quickest rates in over seven years, with series-record month-onmonth drops in the respective index levels.