The final June data confirmed a clear slowdown in the pace of private sector business activity. At 52.8, the headline index was unrevised from its flash estimate and so still 1.2 points below its final reading in May and indicative of the smallest increase in output since March.

The deceleration was largely due to services where, at 53.7, the final sector PMI matched its provisional estimate and so remained down 1.5 points versus May. The fall here reflected a much smaller increase in new orders but masked a rise in headcount that was the largest since last September. Significantly, service providers noted that vacancies had become easier to fill and faster payroll growth paved the way for an outright reduction in backlogs for the first time since January. Looking ahead, businesses remained positive about growth prospects with some 48 percent of respondents expecting an increase versus just 11 percent anticipating a decline. That said, the degree of positive sentiment still eased for a second successive month and was the lowest since January.

Input costs climbed sharply again but the inflation rate declined for the first time in three months and was the lowest since May 2021. Higher salaries remain an issue. Output prices also increased at a slower pace than in June.

In line with the rest of Europe, today's data confirm a very lopsided UK economy, with overall growth dependent upon a relatively buoyant service sector. For the BoE, this is problematic as services continue to pose the main threat to inflation as wage rates remain uncomfortably high. Consequently, the BoE is still very likely to hike interest rates again at its next meeting in August. The June update leaves both the UK's ECDI (21) and ECDI-P (8) in positive surprise territory, meaning that economic activity in general remains somewhat faster than anticipated.

The final data are expected to confirm a marked deceleration in activity rates in June.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.