Service sector

Growth slows in services sector as post-lockdown boom wanes

The UK services sector grew much slower than expected in August and at its slowest pace since March as demand returned closer to normal after a post-lockdown boom.

Yet companies also said they were hiring at a rate not seen in at least the past quarter century.

The IHS Markit CIPS UK Services PMI hit 55 in August. It is a far cry from May’s 62.9 and a slowdown from July’s 59.6.

Economists had predicted a score of 55.5 according to a consensus of Pantheon Macroeconomics.

Yet the figure still implies that the sector is growing – any score above 50 is positive.

“The services sector lost momentum for the third consecutive month as the impact of looser pandemic restrictions faded in August,” said Tim Moore, chief economics officer at IHS Markit, which compiles the report. ‘investigation.

The job creation rate has increased, beating the previous survey record which was set in June 2014. wages.

This increase in wages drives up costs for service companies, which in turn pass on some of this increase to their customers, according to the survey.

The labor shortage – and the number of employees who have to self-isolate because they have Covid-19 – has also put pressure on the sector, leading to unfinished projects.

Companies have also reported problems in their supply chains.

“Many businesses have suffered growth constraints due to staffing shortages, self-isolation rules and stretched supply chain capacity,” Moore said.

“Service providers have reported the largest increase in employment since data collection began 25 years ago.

“The hiring of additional staff generally reflected efforts to bring the workforce back to pre-pandemic levels after widespread job cuts last year. Many survey respondents commented on long waiting times to fill vacancies and surprisingly high turnover as the UK economy reopens.

Duncan Brock, group director at the Chartered Institute of Procurement and Supply, said: “With the third consecutive monthly decline, growth in new orders failed to impress and overseas work barely increased.

“Brexit continued to take its toll and supply shortages and logistical difficulties will add pressure in the months ahead, but service businesses remained enthusiastic about future opportunities.”