UK services returned to growth in July, and the sector cut jobs for a twenty second month, which equals the longest run in thirty years of the survey
Twenty two months. That is how long service firms in Britain have been cutting staff, and July did not end it.
The headline S&P Global UK Services PMI business activity index registered 52.1 in July, up from 48.8 in June, according to the release published at 09:30 in London on Wednesday. That is the first reading above the 50.0 no-change mark in three months and the highest since April. It is also below the survey's long-run average of 54.2, which is the qualifier that separates a turn from a recovery.
Employment fell anyway.
Tim Moore, economics director at S&P Global Market Intelligence, wrote that the sector has now shed jobs for a twenty second consecutive month. On his account that run 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." Data collection on this survey began in July 1996, across a panel of around 650 service sector companies. The improvement in July was in the rate rather than the direction, with job losses the least marked since October 2025.
Demand turned, exports did not
New business rose for the first time since February, ending four months of decline.
Firms reported better market conditions, demand for technology services and a tentative pickup in consumer spending. Some also reported an upturn in investment spending and less risk aversion among clients. Work from abroad kept falling, for a fifth month, although at the slowest pace of that run, and where overseas growth was reported it came mostly from European clients. Backlogs were run down again, which is what fed the staffing decision.
The Middle East conflict was named as a constraint by respondents in both the demand and the export panels.
Prices eased at both ends
Input costs rose more slowly for a third month running, to the weakest pace since February, helped by lower fuel bills. Firms still reported higher logistics costs, higher wages and higher prices for technology items and energy-intensive materials.
They passed some of it on. Output charges rose again, and the pace was the softest in five months and well below the peak reached in April. The release describes that increase as a strong one rather than a small one.
Around 45 percent of the panel expect activity to be higher in a year, against 15 percent expecting a fall. That is the most optimistic reading since February.
The composite
The composite output index, which weights manufacturing and services by their share of GDP, rose to 52.2 in July from 49.3 in June. It is the first expansion reading since April. Factory production grew at its fastest rate since September 2024, which this site reported on 3 August from the manufacturing release, where the headline index fell to a four-month low even as output climbed.
Total new business across the private sector rose for the first time in three months. Employment kept falling, and the service economy is where the losses are.
