UK service sector weakness weighs on wider economy - PMI

23rd Jun 2026 07:54

(Sharecast News) - The UK economy continued to falter in June, a closely-watched survey showed on Tuesday, weighed down by sustained weakness in the service sector.

The latest flash UK PMI composite output index from S&P Global came in at 49.4, down on May's 49.7 and a 14-month low. It also missed consensus for a rise to 50.6.

Within that, the manufacturing sector remained in growth, with the manufacturing output index rising to 53.6 - a 21-month high - and the manufacturing PMI coming in at 53.1, down on May's 53.9 but still above the neutral 50.0 benchmark.

However, in contrast the services PMI business activity index fell to 48.7 from 49.3, the lowest it's been for more than three years. A reading above 50.0 indicates growth while one below it suggests contraction.

Overall, new business volumes declined while input prices rose sharply, as inflationary pressures - including higher commodity prices and transport costs - mounted. Employment also fell.

The service sector in particular flagged lower customer confidence due to domestic political uncertainty and the conflict in the Middle East.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the "disappointing" survey results indicated that the economy had contracted for a second successive month.

He continued: "While current weakness is focused on consumer-facing services, an offsetting expansion of the manufacturing sector could soon falter, as demand here is being temporarily buoyed by the building of safety stocks amid ongoing war-related supply worries.

"Much depends on progress towards an end to conflict in the Middle East but closer to home we are seeing signs of the unstable political environment unsettling business confidence and delaying spending."

The US and Iran have struck a 14-point memorandum of understanding, under which both sides have agreed to halt fighting and reopen the Strait of Hormuz while they work towards a final peace settlement. However, tensions remain high.

In the UK, prime minister Keir Starmer announced his resignation on Monday. He is widely expected to be replaced by newly elected MP Andy Burnham, but it is not yet clear how long it will be before a successor is in place.

Data from the PMIs were collected between 11 and 19 June. The weighted composite index is based on responses to a questionnaire sent to panels of around 650 manufacturers and 650 service providers.