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Growth in Britain’s dominant service sector has slowed to its weakest since March after businesses were hit last month by a triple whammy of bottlenecks, workers self-isolating and a less generous tax break for homebuyers.
The latest monthly health check on UK services firms – which account for just under 80% of the economy – found costs rising at their fastest pace in at least 25 years in July, and raised concerns that the best of the UK’s economic recovery from the winter lockdown restrictions might be over.
Related: Inflation and ‘pingdemic’ slow UK’s service sector recovery
The slowdown in US employment growth is also an indicator that staff shortages remain a problem, according to Capital Economics.
Paul Ashworth, chief US economist at Capital Economics, said:
The ADP breakdown does show employment in leisure and hospitality rising by 139,000, but that represents a slowdown on recent months, so it isn’t a sign that low-wage workers are returning to the labour force now that the enhanced unemployment benefits have been withdrawn early in many states. Otherwise, the gains were evenly spread across the remaining service sectors. But construction added only 1,000 jobs, with manufacturing adding 8,000.
