UK service sector growth accelerating, PMI survey says

Man at a computer
Image caption IT services is one sector experiencing rising growth

Activity in the UK's service sector expanded in July at its fastest rate for four months, an industry survey has suggested.

The Markit/Cips services purchasing managers' index (PMI) rose to 55.4 in July from 53.9 in June. A figure above 50 indicates growth.

The figure surprised analysts who had expected a slowdown in activity.

However, the survey also indicated that the service sector cut jobs despite the increased activity.

Employment in the sector had increased slightly during the previous two months.

Increases in the cost of goods bought by firms slowed, but costs remained relatively high as a result of energy price increases and supply chain constraints.

Despite this, stiff competition meant that inflation in the cost of goods bought from service companies was at its lowest rate for 10 months.

'Sluggish recovery'

The strongest increase in activity in services was seen in the Business Services and IT and Computing sectors. Financial services, hotels, catering and restaurants saw their growth slow.

"Yet again it's the segments most exposed to consumers' lack of disposable income that suffered most, and all businesses are being hit by inflation and rising utility bills," said David Noble, chief executive of the Chartered Institute of Purchasing & Supply.

The figures come after a similar survey on Monday showed a surprise slowdown in manufacturing orders for July.

"The survey does not alter the picture of a pretty sluggish recovery," said Vicky Redwood, senior UK economist at Capital Economics.

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