UK Services Sector Sees Sharpest Drop in New Orders Since 2022, PMI Reveals
UK – August 5, 2025: New data from S&P Global shows Britain’s services sector experienced its steepest decline in new orders since November 2022 in July, signaling growing weaknesses in consumer demand and job prospects.
📉 PMI Data Shows Contracting Demand
The services Purchasing Managers’ Index (PMI) fell to 51.8 in July, down from 52.8 in June, while the new business component dropped below the 50‑point mark to 47.7 confirming contraction in orders for the first time since late 2022.
Employment in the sector slipped sharply too, as hiring freezes and tighter budgets pushed the jobs index down to 45.6 its lowest since February 2023. Composite PMI held at 51.5 thanks to modest manufacturing gains.
🧭 Why It Matters: Signs of Cooling Economy
This slowdown comes amid a backdrop of easing inflation headline CPI rose 3.6% in June, above the BoE target, but edging higher short-term expectations to 4.0%. The Bank of England is poised to cut interest rates from 4.25% to 4.00% on August 7, though divisions remain within the Monetary Policy Committee.
Consumer caution is rising despite better affordability retail spending weakened in June, and rising food prices continue to bite into household budgets.
📌 Knowledge Box: What You Should Know
- UK services PMI: 51.8 (July 2025), down from 52.8 in June.
- New business orders index: 47.7, indicating contraction.
- Employment index: 45.6 the lowest since early 2023.
- Inflation remains elevated at 3.6% (CPI), while unemployment is trending around 4.7%.
🔮 What’s Next – Policy & Market Impacts
- The BoE may ease policy further after August’s 0.25% cut, though votes remain split.
- Persistent weak services data may delay any economic recovery and further depress job growth.
- Financial markets are pricing in two rate cuts by year-end; analysts warn risks remain from wage pressures and inflation expectations.
By Fidelis News
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