Brexit uncertainty batters UK services business confidence

The reading for business optimism declined to one of its lowest levels seen since the 2016 EU referendum

The services PMI covers sectors such as restaurants, hotels, transport, computing and finance, although not retail (Arbor)

Optimism among UK services firms has slipped to a five-month low due to Brexit, according to the latest survey snapshot of the sector.

The Purchasing Managers Index for August came in better than expected at 54.3 in the month, up from 53.5 in July, with any figure above 50 signalling expansion.

The reading suggests the overall UK economy is on course to grow by 0.4 per cent in the third quarter of 2018, after a similar expansion in the second quarter.

But the reading for business optimism declined to one of its lowest levels seen since the 2016 EU referendum, with the compilers remarking that “Brexit uncertainty” was prominently mentioned by respondents.

“Though the sector remained in positive territory, the dark clouds of political indecision are still having an effect and preventing more business activity. Service providers are likely to continue along this vein for the rest of the year until those clouds have cleared,” said Duncan Brock of the Chartered Institute of Procurement & Supply, which sponsors the PMI survey.

Services account for around 80 per cent of the UK economy.

The services PMI covers sectors such as hotels, restaurants, transport, computing and finance, although not retail.

The August PMIs for construction and manufacturing both showed a slowing in activity, with Brexit again cited as a source of uncertainty for managers.