UK service sector still growing, but slowing… Sterling remains steady
The UK’s service sector continues to show growth, according to the latest IHS Markit/CIPS UK Services Purchasing Managers’ Index report, with a steady increase in activity and new business, but growth has slowed to the lowest pace for almost a year. The latest figures show a drop in August to 53.2, from 53.8 in July 2017.
David Johnson, director at currency specialist, Halo Financial, said:
“Anything above the 50.0 mark represents growth in the sector, despite a slowing rate.
“The UK’s service sector makes up almost 80% of the UK economy. Yet the Pound has remained steady on the news. Business confidence in the sector also remains high, at its best level for three months, as the UK economy continues to show resilience in the face of ongoing uncertainty.”
Cost pressures have once again been flagged for the UK service sector, recording the quickest rise in input price inflation for six months. Price increases were seen across fuel, imports and staffing costs, leading to increased charges from service providers. This has led to a significant rise in backlogs and created staffing pressures for the sector. Continued economic uncertainty delaying purchasing decisions was also cited as a reason for slowing growth in the sector, directly affecting the number of new orders.
David Johnson, adds:
“We have been warning of rising cost pressures across UK industry this year, as a weak Pound increases the cost of imports, and rising commodities prices start to take their toll. Economic uncertainty is also causing currency market volatility, with ripple effects being felt across UK businesses trading internationally. However, companies can take steps to mitigate some of these effects through careful currency planning and combining hedging and risk management strategies to address specific pressures.”