- UK business activity expands modestly, new orders grow for first time this year
- Services sector grows fastest in three months, outpaces German and French counterparts
- Employment, export business, future output indexes worsen amid global uncertainty
LONDON, June 23 (Reuters) - British business activity expanded modestly in June as new orders grew for the first time this year but employers cut jobs more quickly and worried about the conflict in the Middle East, a survey showed on Monday.
The S&P Global UK Composite Purchasing Managers' Index (PMI), a gauge of the private sector economy, rose to 50.7 from 50.3 in May - inching further above the 50.0 growth threshold. A Reuters poll had forecast a rise to 50.5.
The services sector, which dominates Britain's economy, marked its fastest growth in three months and it outpaced its German and French counterparts in June.
Factory activity dropped for a ninth month running. While it was the smallest contraction since January, British manufacturers continue to underperform against their peers in the biggest euro zone economies.
Survey company S&P Global said the report was consistent with economic growth of around 0.1% in the April-June period - matching the Bank of England's estimate of the current underlying pace of the economy's expansion.
"The PMIs suggest that the biggest hit to the economy was in April and things are now starting to recover. That said, the subdued level of the PMIs is still pointing to near stagnation," said Thomas Pugh, chief economist at tax, audit and consulting firm RSM UK.
Official data published earlier this month showed Britain's economy slowed sharply in April, reflecting shockwaves from U.S. President Donald Trump's announcement of wide-ranging tariffs and a one-off hit from the end of a tax break on property sales.
The composite PMI's employment, new export business and future output indexes worsened in June, with the latter affected by "elevated global economic and political uncertainty", according to S&P Global.
World shares slipped on Monday and oil prices briefly hit five-month highs before retracing gains as investors awaited possible retaliation from Iran following U.S. attacks on its nuclear sites.
The new orders index ticked above the 50 growth threshold for the first time since November.
The survey was conducted between June 12 - the day before Israel started to attack sites in Iran - and June 19.
S&P Global said the hit to staffing also reflected the increase in employers' social security contributions which finance minister Rachel Reeves introduced in April.
Selling prices increased at the slowest pace since January 2021 - something that will reassure the Bank of England as it monitors an increase in the headline rate of consumer price inflation that it hopes will be temporary.
"That makes an August rate cut even more likely," Pugh said.
The PMI for the services sector rose in June to 51.3 from 50.9 in May. The manufacturing PMI rose to 47.7 from 46.4.
Reporting by Andy Bruce; Editing by Toby Chopra and Hugh Lawson
Source: Reuters