UK Services PMI indicates marginal improvement in the sector growth in July

The report from IHS Markit and Chartered Institute of Procurement & Supply (CIPS) showed that activity in the services sector of the UK's economy picked up slightly in July from June's four-month low.

According to the report, the Markit/CIPS UK Services Purchasing Managers' Index (PMI) rose to 53.8 in July from an unrevised 53.4 in June. Economists had forecast the indicator to edge up to 53.6. The 50 mark divides contraction and expansion.

The latest reading, however, signaled a slower rate of business activity expansion than the post-crisis trend as heightened economic uncertainty and fragile confidence among clients suppressed the growth.

According to the report, new business expanded at solid rate in July, although the improvement was one of the weakest seen since last autumn. Meanwhile, employment numbers rose at fastest pace since January 2016. Input cost inflation remained strong in July, driven by rising food prices, energy bills and salary payments. Higher operating expenses led to the fastest increase in average prices charged by service sector firms for three months.

Chris Williamson, Chief Business Economist at HIS Markit, which compiles the survey, noted: "The service sector PMI indicates that businesses remain in expansion-mode despite heightened uncertainty about the outlook, but also highlights how the risks to future growth remain firmly biased to the downside". He also added that "taken together, the three PMI surveys are broadly consistent with economic growth of just over 0.3%, putting the country on course for another steady but sluggish expansion in the third quarter."