UK services sector returns to growth in July

(Sharecast News) - The UK services sector returned to growth in July, according to a survey released on Wednesday. The headline seasonally-adjusted S&P Global services PMI business activity index rose to 52.1 from 48.8 in June, coming in above the 50.0 mark that separates contraction from expansion for the first time in three months.

It was the highest reading since April, but still below the long-run average of 54.2.

The survey showed a marginal rise in total new business received by service sector companies, which ended a four-month period of decline. However, the rate of expansion was softer than seen on average in the first quarter of 2026.

Backlogs of work continued to fall, while input price inflation slowed for the third consecutive month to its lowest since February. This was helped by reduced fuel bills in July.

Tim Moore, economics director at S&P Global Market Intelligence, said: "UK service providers moved back into growth mode during July as greater consumer spending and strong demand for technology services helped to boost overall business activity.

"More supportive market conditions meant that new work picked up for the first time in five months, although the rate of expansion was still sluggish in comparison to historic trends. Many firms cited geopolitical uncertainties and the Middle East conflict as factors limiting their growth trajectory, despite some signs of easing risk aversion among clients.

"A rebound in both activity and new business could not prevent a further decline in staffing numbers, with job losses seen for the twenty-second consecutive month The current duration of falling employment is a joint-record in 30 years of data collection, now equalling those seen during the global financial crisis and in the wake of the dotcom bubble.

"On a positive note, business activity expectations picked for the second month running and reached the highest level since February. Stronger growth projections for the year ahead partly reflected hopes of de-escalating Middle East tensions and recent signs of easing inflationary pressures."