The IHS Markit purchasing managers’ index for services rose to 51.4 in July, from 50.2 in June. A reading above 50 indicates that a majority of businesses reported increased activity.
The sector expanded for the fourth straight month with the latest growth the fastest since October 2018.
Commenting, Chris Williamson, Chief Business Economist at IHS Markit, said the improved rate of growth in the service sector is “welcome news” after other sector surveys revealed “the sharpest drop in manufacturing output for seven years and a construction sector that is mired in its deepest downturn for a decade”.
He added: “The overall picture is one of an economy that is only just managing to skirt recession,” noting that July’s performance was “among the worst since the height of the global financial crisis in 2009”.
However, despite the improvement, activity has averaged 50.3 so far this year, down from the 2018 average of 53.
“While services activity grew in July, this marginal improvement on last month is a smokescreen,” said Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.
“Fundamental weaknesses remain in a sector pinned down by Brexit uncertainty and increasingly stagnant global economic growth.”
In this rapidly changing economic landscape, it is essential that all business owners and managers be aware of income and expenditure by keeping proper records and monitoring trends and patterns. Profit and loss accounts will help you understand how your business is progressing, as well as alert you to any potential issues which might arise, giving you ample warning to rectify the problems or make the necessary adjustments to keep your business on track and successful.
At Beavis Morgan, our specialists to small and medium sized businesses are available to provide general business advice and to structure your business for tax. We can also assist with long and short term forecasts, budgets, business plans, sensitivity analysis, and calculating and checking compliance with covenants.