UK services PMI returns to 38-month low on referendum woes

UK services expansion weakened in June to match April's 38-year low amid a darkening outlook and worries about Brexit, according to data released on Tuesday.

The Markit/CIPS UK services purchasing managers’ index fell to 52.3 from 53.5 in May, missing economists’ expectations for a reading of 52.7.

Growth over the second quarter as a whole was the weakest since the first quarter of 2013 when the current upturn began, while the 12-month outlook was the darkest since December 2012.

Companies said uncertainty linked to the EU referendum had weighed on workloads and incoming new business.

The data collection window for the June survey was 13-28 June, with 89% of responses received before 24 June

The volume of new business received by UK service providers rose at a slightly faster rate in June, but the increase was still the second weakest seen since the upturn began three-and-ahalf years ago.

Chris Williamson, chief economist at Markit, said: “The PMI surveys indicate that the pace of UK economic growth slowed to just 0.2% in the second quarter, with a further loss of momentum in June as Brexit anxiety intensified. Hiring has also clearly been hit as firms lack clarity on the economic outlook. Business optimism in the vast service sector is down to a three-and-a-halfyear low.

“A further slowing, and possible contraction, looks highly likely in coming months as a result of the uncertainty created by the EU referendum. However, with the June PMIs having already fallen into territory that would normally be associated with the Bank of England cutting interest rates, it’s unlikely that policymakers will wait for more data before unleashing additional monetary stimulus. More policy action is therefore likely in the coming weeks.”