In July, the UK’s dominant services sector saw its most significant drop in new orders in almost three years, increasing pressure on the Bank of England to lower interest rates this week.
According to S&P Global Market Intelligence, new business across the sector, which covers finance, IT, communications and property but not retail, fell slowly since November 2022. Based on a survey of 650 firms, the figures point to an apparent loss of momentum across the broader economy.
The purchasing managers’ index (PMI) for services fell from 52.8 in June to 51.8 in July. Any figure above 50.0 indicates growth, so the drop suggests the economy is still expanding, but only just.
Concerns about the cost of doing business and subdued demand also led to faster job cuts. The employment index slipped to 45.6, the lowest level since February, down from 47.0 in June.
The data follows disappointing official figures, with the economy contracting in April and May, and unemployment rising to 4.7%, a four-year high.
Financial markets now see a 95% chance the Bank will cut rates by 0.25 percentage points on Thursday, amid broader global concerns and Donald Trump’s new round of import tariffs introduced last week.
Business leaders have warned that planned Government policies, including a £25 billion rise in employer national insurance contributions and a 6.7% minimum wage increase, could further weigh on jobs and growth.
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