The UK services sector contracted for a second consecutive month in June, with business activity falling at its fastest pace in nearly three-and-a-half years as weak domestic demand and global uncertainty weighed on the economy, according to the latest S&P Global PMI survey.

The S&P Global UK Services PMI Business Activity Index slipped to 48.8 in June from 49.3 in May, remaining below the 50.0 no-change mark and recording its lowest reading since the start of 2023.

Businesses cited weak domestic economic conditions, geopolitical uncertainty linked to the Middle East conflict and cautious client spending. Consumer-facing firms also reported lower footfall during the late-June heatwave, although some hospitality businesses benefited from demand related to the FIFA World Cup.

New business declined for the fourth straight month, with the pace of contraction the fastest since November 2022. Export orders also continued to fall, while employment declined at the quickest rate since February as firms reduced headcount and left vacancies unfilled.

Input cost inflation eased further after reaching a 41-month high in April, while selling price inflation slowed to its weakest pace since February.

The S&P Global UK PMI Composite Output Index fell to 49.3 in June from 49.7 in May, marking a second straight month of contraction and its lowest reading since April 2025. Business confidence improved slightly from May's 13-month low, although it remained below the long-run average.

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