5th Aug 2025 10:08
(Alliance News) - Service sector growth in the UK slowed but beat expectations in July, amid an "unfavourable global economic backdrop" while optimism improved as US tariff concerns faded.
The S&P Global UK services purchasing managers' business activity index fell to 51.8 points in July from 52.8 in June, but beat the July 24 flash reading of a sharper fall to 51.2 in July.
Getting closer to the neutral 50-point mark separating growth from contraction, it indicates the pace of service sector business activity growth in the UK slowed in July.
The composite PMI meanwhile eased to 51.5 in July from 52.0 in June, outperforming the 51.0 flash reading.
Total new work fell in July, with the rate of decline the sharpest since November 2022, amid weak client confidence and delayed investment decisions.
Tim Moore, economist director at S&P Global Market Intelligence, said: "Hiring trends were especially subdued, with total workforce numbers decreasing to the greatest extent since February. Worries about rising payroll costs were cited as the main factor holding back recruitment."
He added that suppliers again aimed to pass on rising employment costs, but noted that the latest increase in input rises was the slowest since December.
Moore continued: "Despite headwinds from strong cost pressures and lacklustre domestic economic conditions, service providers remain upbeat overall regarding the year ahead business outlook. Optimism improved since June, helped by receding concerns about US tariffs and hopes of a boost to business and consumer spending from interest rate cuts in the second half of 2025."
The services PMI features a panel of 650 private sector companies, with responses collected between July 10 and 29.
S&P data from Friday showed that the manufacturing purchasing managers' index rose to 48.0 in July from 47.7 in June, but underperformed against the 48.2 flash reading.
The rate of contraction in output had slowed to its weakest in the current period of decline, while business optimism rose to a five-month high.
Construction PMI data will be released on Wednesday.
By Tom Budszus, Alliance News slot editor
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