Lacklustre services activity in July points to another quarter of slow UK growth, says EY.
Services PMIs edged up to 53.8 from a four-month low of 53.4 in June, following a modest improvement from manufacturing PMIs and a contraction in construction PMIs this week.
UK GDP growth in the second quarter was entirely dependent on services, which expanded 0.5 per cent over the period, while industrial production contracted 0.4 per cent and construction output declined 0.9 per cent.
UK GDP growth “muddled through” in the second quarter hitting 0.3 per cent.
“Overall the purchasing managers’ surveys point to a UK economy continuing to struggle to get out of a low gear,” says Howard Archer, chief economic adviser to EY Item Club.
Muted confidence and limited new business growth mean activity is unlikely to pick up in the near-term, Archer says.
“Service companies’ confidence over future activity remained weak, rising only slightly from June’s lowest level since December 2011. Nevertheless, employment growth in the services sector picked up in July. Given concerns over labour shortages in some sectors, it may be that some services companies are keen to hire workers while they can.”