3rd Jul 2025 10:22
(Alliance News) - The UK service sector grew at its fastest rate for 10 months in June, supported by increased new orders, numbers on Thursday showed.
The S&P Global UK services purchasing managers' business activity index rose to 52.8 points in June from 50.9 in May, topping the flash reading of 51.3 released late last month.
The reading moved further above the neutral 50-point mark separating growth from contraction and indicates a "solid rate" of business activity expansion. However, S&P Global noted that the reading was still below the long-run series average of 54.3 points.
"The latest upturn was the strongest since August 2024," S&P Global added.
Survey respondents attributed improved output levels to organic sales growth, helped by improving business and consumer spending, S&P Global said.
Some service providers also commented on headwinds from subdued UK economic conditions, the impact of US tariffs and adverse geopolitical factors.
Total new work received by service sector businesses increased marginally in June for the second time in the year so far.
There was also a "solid decline" in employment numbers across the service economy, extending the current period of contraction to nine months, S&P Global said.
The UK composite PMI also increased to 52.0 points in June from 50.3 in May. The index was above the neutral threshold for the second month after a downturn in April, and beat a flash reading of 50.7 points from last month.
On Tuesday, S&P Global reported that the PMI for manufacturing picked up to 47.7 points in June from 46.4 in May, though the sector remained in contraction. The reading was unchanged from the flash estimate.
"June data highlighted a modest rebound in UK service sector growth, fuelled by a turnaround in domestic business and consumer spending after a soft patch during the spring," said Tim Moore, economics director at S&P Global Market Intelligence.
"Meanwhile, concerns about elevated payroll costs meant that service providers were reluctant to turn on the hiring taps. Employment numbers decreased for the ninth month running and at a faster pace than in May, with job shedding again often attributed to redundancies as well as the non-replacement of voluntary leavers.
"A combination of easing price pressures and lower employment leaves the door open for the Bank of England to resume its run of interest rate cuts at the next policy meeting in August," Moore concluded.
The services PMI is compiled by S&P Global from responses to a questionnaire from a panel of around 650 service sector companies in the UK. The responses were collected between June 12 and June 26.
By Michael Hennessey, Alliance News reporter
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