LONDON (Reuters) – British services activity grew last month at its fastest pace since April and price pressures eased, according to a survey that highlighted a more favourable outlook for inflation and an improving economy following July’s general election.
Final results of the S&P Global/CIPS UK PMI survey released on Wednesday showed that the services sector rose to 53.7 in August from 52.5 in July and a preliminary estimate of 53.3.
The survey adds to other signs of improving business confidence in Britain since the July 4 election, which was won overwhelmingly by Prime Minister Keir Starmer’s Labour party.
Cost pressures on services companies and their selling prices rose at the slowest pace since early 2021, data that should be welcomed by the Bank of England (BoE), which meets on September 19.
The central bank last month cut interest rates for the first time since March 2020, to 5.0% from 5.25%, the highest level in 16 years. Investors expect another rate cut before the end of the year.
“August data highlighted a recovery in the performance of the UK services sector, as improving economic conditions and political stability at home helped support consumer demand,” said Tim Moore, chief economic officer at S&P Global.
The survey, however, shows that optimism for the year ahead has eased slightly and employment growth has slowed.
“Hopes of lower interest rates and continued improvement in broader economic conditions have helped support confidence, but some businesses have expressed concerns about political uncertainty ahead of the autumn budget vote,” Moore said.
British Chancellor of the Exchequer Rachel Reeves has warned that taxes will have to rise in the budget to be presented on October 30 to ease pressure on public finances.
The composite indicator, which includes the services and manufacturing sectors, rose in August to 53.8, after 52.8 in July and a preliminary figure of 53.4.
The British manufacturing PMI, released on Monday, showed that factory output in Britain expanded at a faster pace in August than in other developed markets tracked by S&P Global.
(Reporting Andy Bruce; Claude Chendjou, edited by Kate Entringer)
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