Economy

UK services sector in fastest rebound in 5 years but redundancies increase

The UK services sector grew at its quickest pace in five years as the IHS Markit PMI reading came in at 56.5 for July compared to 47.1 in June.

The reading of 56.5 also signals a return to growth as the reading is over 50 (PMI explained).

Services are of pivotal importance to the UK economy and include areas such as finance, law and consulting – making up nearly four fifths of the output of the country.

Although unfortunately the return to growth was not supported by improvements in employment. The measure for employment in the services sector for July was at 39.6 – significantly below the neutral level of 50.

“This undoubtedly good news is masking some underlying problems that will still need addressing. Employment fell even more quickly in July as some firms made redundancies in response to worries about the length of the recovery. Although in a small minority, other service providers found new opportunities to hire talent and had the pick of the bunch to fill vacancies from growing numbers of applications.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply

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