UK Services Activity Expansion Weakest Since Sep 2016: Survey

-- August IHS Markit/CIPS Services PMI 53.2 vs 53.8 July

By Jamie Satchithanantham

     LONDON (MNI) - UK service sector activity lost ground in August, recording

the weakest rise in business activity in 11 months, a survey published Tuesday

showed.

     The August Services PMI survey by IHS Markit, conducted for the Chartered

Institute for Procurement and Supply, fell 0.6 points to 53.2 from 53.8 in July,

below the MNI median of 53.5. Despite the fall, the index registered above the

50.0 no-change value for the thirteenth consecutive month.

     The slowdown in service sector activity, which accounts for almost 80% of

UK gross domestic product, was attributed to easing rates of growth of business

activity and new work as well as higher cost pressures within the sector.   

     Since July, the growth of incoming work has lost momentum and remained

"notably weaker that seen on average in the first half of 2017", according to

IHS Markit.

     New order volumes grew at the softest pace since September with a number of

service providers commenting that fragile business confidence had led to delayed

spending decisions among clients.

     August saw the rate of input price inflation rose at the fastest pace since

February, with higher staff costs, fuel bills and imported material prices all

contributing to the rise. According to the report, "some firms also suggested

that recent exchange rate depreciation against the euro would likely drive up

costs in the near-term".

     "Although the latest two months' data put the economy on course for another

0.3% expansion in the third quarter, momentum is being gradually lost," Chris

Williamson, Senior Economist at IHS Markit, said.

     "Robust manufacturing growth means the economy may be rebalancing towards

goods production, aided by the weaker pound, but the slowdowns in services and

construction send warning signals about the health of the economy," he added.

     The full IHS Markit release can be seen here: https://goo.gl/MLCY4f

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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