Key facts
- Britain's services sector contracted in June at its fastest pace since January 2023.
- The S&P Global UK Services PMI provisional estimate for June was 48.7, down from 49.3 in May.
- New business and employment in the services sector experienced sharp declines.
- The manufacturing PMI also slowed, falling to 53.1, a three-month low.
- The composite PMI, which includes both services and manufacturing, decreased to 49.4.
Britain's services sector experienced its sharpest contraction in nearly three-and-a-half years in June, according to a provisional estimate from S&P Global. The UK Services Purchasing Managers' Index (PMI) fell to 48.7, below forecasts and indicating a decline in activity, employment, and new business.
This economic downturn presents a difficult landscape for the likely next prime minister, Andy Burnham, who will face challenges including sticky inflation and strained public finances. The economy previously contracted by 0.1% in May, and a similar outcome is expected for June, suggesting flat growth for the second quarter.
A slight easing of cost pressures, partly due to falling oil prices, offered a minor positive note. However, broader cost pressures remain relatively high, contributing to a significant rate of employment decline. S&P Global noted that the unstable political environment has unsettled businesses, highlighting the need for stability to revive economic growth.
The manufacturing sector also showed signs of slowing, with its PMI falling to a three-month low. The composite PMI, which aggregates services and manufacturing data, also declined, reflecting a broad-based economic slowdown.