British services companies grew less than expected last month as hiring eased to its slowest pace since March 2014, suggesting the economic recovery weakened at the start of the second half of this year.
Wednesday’s Markit/Cips services purchasing managers’ index (PMI) fell to 57.4 in July from 58.5 in June, undershooting a Reuters forecast for 58.0 but still indicating expansion among services businesses.
Taken together with manufacturing and construction surveys earlier this week, the PMI pointed to economic growth of about 0.6% per quarter, slightly slower than the 0.7% officially reported for the three months to June.
The findings will give Bank of England policymakers plenty to chew over as they prepare a slew of announcements on Thursday about the economic outlook and interest rates.
The Bank’s governor, Mark Carney, said last month it would take sustained growth of more than 0.6% per quarter to take up any remaining slack in the economy, a key factor behind any increase in interest rates.
And Markit suggested the upturn was relying on financial services companies, which in July enjoyed their best month since 2013. By contrast, business services like architects and accountants suffered their weakest growth in almost three years.
