Brexit: UK service sector economy suffers fall

Activity in the UK's services sector recorded a deeper-than-expected fall last month, sealing a 'triple-whammy of disappointing' results from the UK economy.

Picture: Getty
Picture: Getty

The closely watched Markit/CIPS services purchasing managers’ index (PMI) fell to 53.4 in June, down from 53.8 in May and below economists’ expectations of 53.5.

A reading above 50 indicates growth.

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The powerhouse industry, which accounts for around 78% of the UK economy, struggled for momentum as the inflows of new business sunk to a nine-month low.

It comes after manufacturing output drifted to its lowest level for three months in June, while the construction industry took a tumble due to a dearth of new work.

Chris Williamson, chief business economist at IHS Markit, said business optimism is suffering by intensifying political uncertainty from the General Election and the start of the Brexit negotiations.

He said: “A slowing in services sector growth completes a triple-whammy of disappointing PMI survey readings.

“Although the three PMI surveys are running at levels that are historically consistent with GDP growing by around 0.4% in the second quarter, it’s clear that the economy heads into the third quarter losing momentum.”

The pound was down 0.2% against the US dollar at 1.290 and 0.1% lower versus the euro at 1.137 following the update.

Despite the sector’s stuttering performance, employment levels brightened last month as job creation lifted to a 14-month high in response to a growing backlog of work.

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