UK services activity posts weakest performance since January 2023

UK services activity contracted for a second consecutive month in June, posting its weakest performance since January 2023, according to data released on Friday by S&P Global.

The S&P Global UK Services PMI Business Activity Index fell to 48.8 in June from 49.3 in May, staying below the 50-point threshold that separates growth from contraction.

S&P Global said service providers cited weak domestic economic conditions, geopolitical uncertainty linked to the Middle East conflict and greater risk aversion among clients.

Consumer-facing firms reported that a late-June heatwave reduced footfall, while some hospitality businesses saw stronger demand linked to the 2026 FIFA World Cup.

New work declined for the fourth month in a row, with the rate of contraction accelerating to its fastest since November 2022.

Export orders also fell solidly, mainly due to weak demand from European clients, though some firms reported robust sales in the US.

Employment also declined, with job losses reaching the sharpest pace since February, as firms reported redundancies or did not replace voluntary leavers due to weaker business needs and margin pressures.

Input cost inflation eased to its lowest since March after hitting a 41-month peak in April, but costs remained high due to wages, transport bills and technology prices.

Prices charged by service firms rose sharply, though at the slowest pace since February, as competition and subdued demand limited firms’ ability to pass on costs.

Tim Moore, economics director at S&P Global Market Intelligence, said June data confirmed “a clear loss of momentum” for the UK economy during the second quarter of 2026.

The S&P Global UK PMI Composite Output Index fell to 49.3 in June from 49.7 in May, indicating a marginal decline in private sector activity for the second month running.