UK Services Sector Bounces Back into Growth

The UK services sector returned to growth in July, according to S&P Global's purchasing managers' index (PMI), which rose to 52.1 from 48.8 in June.

This marks a significant improvement and suggests that demand is picking up after a soft patch. The composite PMI, which combines services and manufacturing, also increased to 52.2 from 49.3, indicating that the private sector has returned to expansion for the first time since April.

However, not all news is positive. Export orders fell again, and staffing levels slipped, suggesting that companies are still cautious about taking on costs. Inflation pressure also eased, with firms reporting their weakest increase in input costs since February and a slowest rise in prices charged in five months, helped by lower energy costs.

This development is particularly noteworthy as services prices tend to be the 'sticky' part of inflation, making softer readings more significant for investors. The cooling of price pressures may influence how the Bank of England sets interest rates, with mortgage rates often reacting first to these changes.