Service sector enjoys surprise bump but outlook remains stormy

Josh Hall's picture
by Josh Hall

The UK's service sector grew slightly in July, defying predictions.

The service purchasing managers' index rose to 51.4 during the month, where a reading over 50 represents growth. The figure was up from 50.2 in June.

It was substantially lower than the long-term average of 54.9, but was still better than the complete stagnation predicted by analysts.

The service sector's performance is in stark contrast to other sectors such as manufacturing and construction, which have endured a series of torrid months as concern deepens about a no-deal Brexit. Last month manufacturing output saw its worst collapse in seven years.

Across the board, July PMI surveys recorded amongst their worst readings since the financial crisis was at its peak in 2009.

There is a growing consensus that the UK is heading for at least a technical recession, with analysts predicting further slowdowns across the economy in the third quarter of the year.

Meanwhile the Resolution Foundation, a UK think-tank, predicts that lower-income Britons are even worse prepared for a recession today than they were in 2008, thanks to a decade of wage stagnation.

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