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Activity in the UK private services sector rose at the fastest rate in 10 months in June while growth in the prices charged by businesses slowed, according to a closely watched survey published on Thursday.
The S&P Global UK Services PMI final index rose to 52.8 in June, up from 50.9 in May and the highest since August 2024. The latest and final reading was above the earlier June flash estimate of 51.3 and “indicative of a solid rate of business activity expansion”, S&P said.
Tim Moore, economics director at S&P Global Market Intelligence, said the improvement in the services sector in June had been “fuelled by a turnaround in domestic business and consumer spending after a soft patch during the spring”.
The survey also showed growth in businesses’ costs eased for the second consecutive month, running at its lowest in 2025 so far and contributing to the weakest rise in prices from service providers for nearly four-and-a-half years.
The figures offer a measure of good news for Rachel Reeves as the chancellor looks to revive economic growth in order to fund spending plans and lift living standards.
Gilts rallied on Thursday after Prime Minister Sir Keir Starmer confirmed Reeves would stay in post for a “very long time to come”, after he failed to back her in the House of Commons on Wednesday.
Rob Wood, economist at consultancy Pantheon Macroeconomics, said the “huge” upward revisions to the PMIs showed that “UK growth continues to improve as global policy uncertainty fades, with [US President Donald] Trump avoiding his more ruinous tariffs and oil prices falling after war with Iran was put on hold”.
The improvement in the PMIs for services — which constitute about 80 per cent of the economy — helped lift the composite index, a weighted average of manufacturing and services, to 52, up from 50.3 in May and the highest since September 2024.
Employment in the services sector fell for the ninth consecutive month, according to the survey, at a marginally faster rate than in May.
“A combination of easing price pressures and lower employment leaves the door open for the Bank of England to resume its run of interest rate cuts at the next policy meeting in August,” said Moore.
Financial markets are pricing a more than 80 per cent probability that the BoE will cut rates by a quarter point from 4.25 per cent now when it meets next month, after policymakers lowered borrowing costs four times since the summer of 2024 on the back of a weakening jobs market.
Separate data published by the BoE on Thursday also pointed to price pressures broadly weakening.
Businesses forecast wage growth for the year ahead at 3.6 per cent in the three months to June, the lowest rate since the question was first asked on a regular basis in May 2022, according to the BoE’s Decision Maker Panel, a monthly survey of chief financial officers.
Companies expected wage growth to decline by 1 percentage point over the next 12 months, based on three-month averages, according to the survey.
However, the downward trend was less clear in the latest monthly data, with Wood noting that expected wage growth was unchanged in June from May and expected price growth marginally higher.
A rebound in business employment expectations for the year ahead — at 1.1 per cent last month, up from 0.2 per cent in May — pointed “to a need for Monetary Policy Committee caution”, Wood added.
