Growth in UK service sector accelerates as demand hits 14-month high

The S&P Global UK services PMI survey scored 52.5 in July, increasing slightly from 52.1 in the previous month.

Growth in the UK’s services sector picked up last month, as firms recorded the strongest levels of demand for over a year (Lucy Ray/PA) (PA Archive)

Growth in the UK’s services sector picked up last month, as firms recorded the strongest levels of demand for over a year.

Experts said that there was a slight rebound following the result of the general election, which increased certainty for firms.

The S&P Global UK services PMI survey scored 52.5 in July, increasing slightly from 52.1 in the previous month.

It was marginally ahead of economists’ predictions.

The headline score remained above the 50.0 threshold for the ninth month in a row, which means that activity in the sector is still growing.

Joe Hayes, principal economist at S&P Global Market Intelligence, said: “With the general election period coming to an end at the start of July, survey data for last month showed the UK service sector enjoyed a modest rebound after a fairly subdued end to Q2.

“The business activity index crept up only slightly, but the New Business Index jumped by over three points to its highest level in 14 months as firms reported an influx of new clients and contracts.”

The report found service firms witnessed the strongest upturn in demand since May last year after firms found more new business from overseas market.

It also found that service sector employment in the UK rose at its fastest pace in over a year.

This came as business confidence rebounded after a slipping to a recent low in last month’s data.

Nevertheless, the survey data revealed “further stubbornness” in pricing as both input costs and output charges rose at historically elevated rates.

Operating costs were pushed higher by transport, IT, wages and supplier fees, according to surveyed firms.