Growth picks up among UK services firms after election result, PMI shows
BRITISH services companies reported an influx of new orders and the biggest rise in employment for over a year during July as optimism rose on the back of Prime Minister Keir Starmer’s election victory, a survey showed on Monday (Aug 5).
The S&P Global UK Services Purchasing Managers Index rose in July to 52.5 from 52.1 in June and revised up slightly from a preliminary estimate of 52.4.
The survey added to signs of an upturn in business sentiment since the July four election which delivered a landslide victory for Starmer’s Labour Party.
A gauge of new business rose to its highest level since May last year while the future activity index struck a five-month high – something that survey compiler S&P Global linked to the election outcome and expectations for lower interest rates.
The Bank of England cut interest rates last week for the first time since March 2020, to 5 per cent from a 16-year high of 5.25 per cent.
“Albeit only one month into the second half of 2024, the latest survey results bode well for a reasonable GDP growth print in Q3,” said Joe Hayes, principal economist at S&P Global Market Intelligence.
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He said price pressures, while close to their lowest since early 2021, remained historically high – a worry for the BOE, which signalled it will take a cautious approach about cutting interest rates further.
The composite PMI – which combines the services data with last week’s manufacturing survey – rose in July to 52.8 from 52.3 in June and revised up from a flash estimate of 52.7.
The manufacturing PMI showed output in British factories expanded faster in July than in any other developed market surveyed by S&P Global. REUTERS
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