Service sector feels the heat as footfall slows

THE service sector grew at the slowest rate in three months in July, as expansion was hampered by increased staffing and fuel costs.

The IHS Markit/cips purchasing managers’ index for the sector was 53.5, down from 55.1 in June. Any score on the index above 50 signals growth, so the survey suggests the economy’s largest sector is still expanding, but not as fast as before.

July’s figures mark two years of new business growth in services, but are lower than average.

The hot weather and the World Cup had a mixed effect on services, with some firms reporting increased demand, but others saying customers had fallen.

Uncertainty about the outcome of Brexit led some respondents to the survey to put off decisions and avoid risks. Tim Moore, of IHS Markit, said: “The service sector moved back into the slow lane in July as business activity growth lost momentum for the first time since the start of spring.

“While it’s difficult to quantify the precise impact of the recent heatwave on overall business performance, some survey respondents reported that a combination of hot weather and the World Cup had weighed on consumer footfall,” he said.

The eurozone services sector also lost steam in July, with a PMI figure of 54.2 in July, down from June’s fourmonth high of 55.2.

Every country surveyed experienced a drop in growth, with Spain reaching a 56-month low. Business confidence fell to the lowest level since November 2016.