Growth in the services sector slowed slightly in July, according to the latest Investec Services PMI.
The headline PMI came in at 59.5 in July, down from June’s 61.2 outturn, but still extending the run of above-50 readings to four years in the process.
The survey indicates the slowest growth in the rate of activity since 2014 and the weakest level of employment growth since 2013.
The PMI covers areas such as telecoms, professional and financial services and tourism but does not include retail.
Despite the Brexit fallout, the New Export Business index expanded at a faster pace than in the previous month, although the strength in new orders here appears to have come from Continental Europe and Asia.
Meanwhile, services companies continued to add to headcounts during July, although the pace at which sector employment is growing slowed to the weakest since May 2013.
The Investec Services PMI also shows that, on the margin side, average input costs rose at a sharp pace in July, with some firms reporting benefits from the drop in sterling’s value against the euro.
Services companies were able to pass on at least a portion of the latest rise in costs through increasing average prices charged.
The profitability index expanded at a solid pace, as it has for 32 successive months now.
Commenting on the services PMI results, Chief Economist with Investec Philip O’Sullivan said: “Given the backdrop of Brexit, it is surprising that the ‘Business Activity: Expected Levels in 12 Months’ Time’ (expectations) index recovered some ground in July from June’s 34 month low.
“With that being said, within this index we note that the only monitored segment within the four (TMT, Business Services, Financial Services and Travel & Leisure) that comprise the Services sector to have seen an improvement in sentiment was TMT, with the others all reporting a less optimistic outlook than in the run up to the referendum.”
