Photograph: Steven Gill/Alamy
Closing summary
The latest services survey from the Institute for Supply Management points to the first contraction in the services sector since May 2020, with the PMI headline index falling to 48.8 from May’s 53.8. The 50 mark separates growth from contraction. The business activity index plunged to 49.6 from 61.2, a massive drop.
Over here, growth in the UK service sector slowed last month amid a “seize-up” in activity as companies put projects on hold in the run-up to the general election.
The latest snapshot from the data provider S&P Global showed growth in the UK’s dominant service sector – which includes transport, IT, finance, communications, property and business services – slowed in June to the lowest level in seven months.
The survey of about 650 businesses, which is closely monitored by the Bank of England, showed a continued expansion in business activity at the end of the second quarter, stretching an unbroken growth run to eight months.
However, businesses said some clients were opting to wait and see the results of Thursday’s vote before placing orders and commissioning new projects.
In the eurozone, private sector growth eased to a three-month low, with activity in the service industries also at a three-month low.
Global stock markets have been cheered by US Federal Reserve chair Jerome Powell’s remarks yesterday about the US “getting back on a disinflationary path” and optimism about interest rate cuts. Tonight, the minutes of the last Fed meeting could give further clues on the central bank’s thinking.
Following strong gains in Asia, the French, Italian and German stock markets all rose by around 1%, led by France with a 1.2% gain. The UK’s FTSE 100 was 0.6% ahead.
There is growing confidence that a majority for Marine Le Pen’s far-right National Rally can be avoided in the second election round on Sunday, with political wrangling under way.
Our other main stories today:
Olivia Cross, North America economist at Capital Economics, has looked at the sharp decline in US services, and what it means for the wider economy.
The decline in the ISM services index to 48.8 in June, from 53.8, takes it to its lowest since the lockdowns in 2020.
Alongside a decline in the ISM manufacturing index, these surveys suggest that GDP growth will remain weak in the third quarter. They also add to evidence that labour demand is softening, and inflation will remain on a downward trend.
