Costs, supply snags and staff shortage put brake on recovery

RISING fuel and transport costs, “pingdemic” labour shortages and bottlenecks across supply chains took the shine off the UK’s recovery in July.

The closely-watched PMI reading for the powerhouse services sector — which accounts for 80% of total economic output — fell from 62.4 in June to 59.6. Any figure above 50 denotes growth, making July the fifth consecutive month of expansion, but this marks the weakest rise in business activity since winter lockdown eased in March.

The slowdown was blamed on rocketing fuel and transport prices as well as growing pressure to increase salaries, all leading to the fastest increase in input costs in 25 years.

Prices charged by service sector companies, which span everything from shops and restaurants to tourism and

finance, also rose at a record pace stoking inflation fears.

It piles pressure on the Bank of England’s monetary committee to consider bringing forward interest rate rises at its meeting tomorrow.

Duncan Brock of the Chartered Institute of Procurement & Supply said: “We suspect that the best of the post-pandemic recovery could be behind us, especially if higher leisure and hospitality costs diminish appetite for consumer spending.”