Growth in the UK services sector eased in August to its slowest pace since March amid supply chain and staff issues, according to a survey released on Friday.
The IHS Markit/CIPS services purchasing managers’ index fell to 55.5 from 59.6 in July and a record high of 62.9 in May. A reading above 50.0 signals expansion, while a reading below indicates contraction.
The survey found that capacity constraints encouraged additional staff recruitment, with the rate of job creation in August surging higher than the previous record in June 2014.
The composite index, which measures activity in services and manufacturing, declined to 54.8 in August from 59.2 in July.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “The third consecutive monthly fall in growth in the services sector showed that a lack of staff and raw materials in August continued to rein back on recovery, after the spring surge.
“Service businesses were particularly hit by lockdowns and the loss of workforces, so it was no surprise that the opening of the UK economy led to the fastest levels of job creation in the sector since July 1996. Job seekers had the pick of the crop in terms of opportunities, but employers had to offer higher wages and more benefits to relieve the restrictions in operating capacity leading to another rapid rise in business costs. This in turn resulted in higher prices to customers and it’s difficult to say how long supply imbalances in the economy will persist.”
