UK services sustain 'solid' growth in June

Woman places menus on tables outside a restaurant in Brighton
Image caption Markit said companies kept headcounts largely unchanged

The UK service sector sustained "solid" growth in June as volumes of new business continued to rise, according to a closely-watched index.

The Markit/Cips services purchasing managers' index (PMI) edged up to 53.9 in June from 53.8 in May. A reading above 50 indicates expansion.

But Markit warned that job creation in the sector remained minimal.

The economy as a whole could have grown by just 0.3% in the second quarter, down from 0.5% in the first, it added.

Official economic growth figures for the second quarter will be released by the Office for National Statistics (ONS) later this month.

'Worrying signs'

The services data follows Markit PMIs for manufacturing and construction in recent days, which showed a slowdown in growth in both sectors.

On a quarterly basis, Markit said that growth in services looked to have slowed to 0.5% in the second quarter from 0.8% in the first three months of the year.

Chris Williamson, chief economist at Markit, said that growth in the sector masked some "more worrying signs" in some of the other survey indicators.

"Inflows of new business rose at the slowest pace for four months in June, and optimism about the coming year hit an eight-month low," he said.

"Companies kept headcounts largely unchanged, highlighting a reluctance to expand workforces as a result of the uncertain outlook and renewed weakness of the manufacturing and household sectors.

"The scope for the private sector to make up for public sector layoffs therefore still looks limited, meaning unemployment could stay stubbornly high for some time."

Meanwhile, growth in the eurozone services sector slowed again in June to an eight-month low, while business confidence slipped to its lowest level in two years, Markit said.

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