Growth in the services sector slowed last month, according to S&P Global UK research

The UK’s services sector saw growth slow last month as businesses put their general election plans on hold, a new survey has revealed.

The S&P Global UK Services PMI survey for June came in at 52.1, down slightly from May’s 52.9. This means that while the sector is still expanding, it is at a slower pace than in previous months.

The headline figure, closely monitored by economists, beat expectations but was the lowest since November last year. A reading above 50.0 indicates activity has increased, which has been the case for eight straight months. But momentum slowed in June, with companies reportedly reluctant to commit to new spending and projects ahead of Thursday’s election.

Joe Hayes, chief economist at S&P Global Market Intelligence, commented: “We are seeing some evidence of a contraction in the UK services economy ahead of the general election, with growth in business activity slowing to a seven-month low in June as the prospect of a change of government led some to adopt a ‘wait and see’ approach, curbing sales.”

The survey suggested that some companies were holding off on placing orders and commissioning new projects until they had a clearer picture of the incoming government. The country’s huge services sector, which accounts for about 80% of total economic output, also accounts for employment.

The PMI survey, which covers sectors such as hospitality, entertainment and culture, finance and insurance, as well as real estate and business services, revealed some intriguing economic trends. From April to June, the survey showed an average score of 53.3, down slightly from 53.7 from January to March, according to Mr. Hayes.

He noted that according to the data, the country is “well on track to achieve another quarter of GDP (gross domestic product) growth,” but that it may not bring the same effect as the growth in the first quarter.

Official data shows that economic growth in the first three months of the year was 0.7%, ending the short recession that we experienced in late 2023. A notable finding of the survey was a slight acceleration in sales growth by international customers, especially those from North America and Europe.