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Activities in the UK’s private services sector rose at the fastest rate in 10 months in June, but growth in prices charged by businesses has slowed down.
The S&P Global UK Services PMI Final Index rose to 52.8 in June, a high of 50.9 in May from 50.9 in August 2024. The latest final reading states that its early flash estimate for June is 51.3 and “indicating the expansion rate of business activity.”
Tim Moore, economic director at S&P Global Market Intelligence, said the improvements in the service sector in June were “spurred by a shift in domestic business and consumer spending after the spring soft patch.”
The survey also eased costs for businesses for the second consecutive month, running at its lowest level in 2025 so far, contributing to the weakest rise in prices from service providers in nearly four and a half years.
The figures provide a measure of good news for Rachel Reeves as the Prime Minister is trying to fund his spending plans and revive economic growth to raise living standards.
Giltz met Thursday after Prime Minister Kiel confirmed that Reeves would “had a very long time” after he failed to support her in the House on Wednesday.
Robwood, an economist at the consultant Pantheon macroeconomics, said the “huge” upward revision of PMIS “shows that the UK’s growth continues to improve as it declines.
Improvements in PMI for services, which make up about 80% of the economy, helped to raise the combined index, the weighted average of manufacturing and services, from 50.3 to a high of 52 since September 2024.
Research shows employment in the services sector has declined for the ninth consecutive month at a rate slightly faster than in May.
“With ease of price pressure and combined with lower employment, the doors will be opened for the Bank of England to resume interest rate cuts at its next policy meeting in August,” Moore said.
Financial markets are priced at 80% or more likely to see a BOE cut by 4.25% or more, when policymakers meet next month after four times in the background of weaker jobs markets, since the summer of 2024.
Individual data issued by BOE on Thursday also pointed out that price pressures would be significantly weakened.
Companies are forecasting wage growth at 3.6% over the three months ending June. This is the lowest rate since questions were first asked regularly in May 2022, according to the BOE decision makers panel, a monthly survey of the Chief Financial Officer.
Research shows that businesses expect wage growth to decline by 1 percent over the next 12 months, based on a three-month average.
However, the downward trend was not very clear in the latest monthly data. Lumber points out that expected wage growth from May to June remains unchanged, with expected price growth being slightly higher.
Rebounds business employment expectations for the next year – up from 1.1% last month, 0.2% in May – pointing out the “need for attention from the Monetary Policy Committee,” Wood added.
