UK business activity weakened further in June as the services sector recorded its sharpest contraction in nearly three and a half years, highlighting a loss of economic momentum during the second quarter. The final S&P Global UK Services PMI Business Activity Index fell to 48.8 from 49.3 in May, its lowest reading since January 2023. The Composite PMI Output Index also slipped to 49.3 from 49.7, marking a second consecutive month below the 50.0 threshold and its weakest reading since April 2025.
The survey pointed to weakening demand as a key driver of the slowdown. New orders declined for a fourth straight month, with S&P Global describing the fall as the steepest in just over three and a half years. According to Economics Director Tim Moore, firms cited persistent cost pressures, subdued customer demand and uncertainty surrounding the Middle East conflict as the main factors weighing on activity. Businesses also reported fragile investment sentiment, greater client caution and pressure on household spending, all of which contributed to softer service-sector output.
There was, however, some encouragement on inflation. Input cost inflation eased to its lowest level since March, largely reflecting lower fuel prices following the decline in global oil prices. Although businesses continued to report higher transport, wage and raw material costs, the moderation in overall cost pressures should provide some relief. Business confidence also improved modestly on hopes that the US-Iran ceasefire will prove durable, but optimism remained well below levels seen at the start of the year as concerns over the broader UK economic outlook persisted.
| Indicator | Previous | Latest |
|---|---|---|
| Services PMI Business Activity | 49.3 | 48.8 |
| Composite PMI Output | 49.7 | 49.3 |
