Slowing growth in UK economic activity continued to contrast with evidence of a sustained recovery in the eurozone, according to surveys of British and European purchasing managers on Wednesday.
The UK purchasing managers' index (PMI) for the services sectors in June slipped to 53.4 from 53.8 in May, and failed to match market expectations of 53.5.
While a number above 50 indicates that business activity continued to expand, the dip shows that it grew at a slower rate – the slowest pace of growth since February.
New order growth stalling
Managers reported the weakest upturn in new orders since September 2016 and optimism about economic prospects for the year ahead fell to an 11-month low.
The survey of the service sectors marked a trio of below par PMI results this week, starting with manufacturing PMI on Monday and a disappointing construction sector PMI on Tuesday.
Market commentators suggested optimism had been hit by political uncertainty following the general election and the start of Brexit negotiations.
Meanwhile, consumer demand was being strangled by higher rates of inflation and lower wage increases.
"The overall picture is one of business spending, investment and exports failing to provide sufficient impetus to fully offset the consumer slowdown," said Chris Williamson at IHS Markit, compiler and publisher of the PMI surveys.
Output data confirm weak Q1
UK productivity data from the Office for National Statistics confirmed the first quarter's weak growth as output fell 0.5% compared with the fourth quarter of 2016.
Despite the weaker survey data, however, second-quarter growth remains on track to improve on the disappointing 0.2% growth seen in the first three months, analysts said.