Economic pressures to test professional and business services
Today the ONS Index of Services statistics revealed an overall output growth of 0.8% in the services sector in the three months to April 2026, following 0.8% growth in the three months to March 2026 and contributing to an overall GDP growth of 0.7% in the same period. However, the monthly data shows that overall services output decreased by 0.2%.
Professional, scientific and technical (PST) activities saw an overall growth of 1.3% in the three months to April 2026.
Hywel Pegler, Head of Professional and Business Services at RSM UK, said: “Professional and business services output showed continued strength and its importance to the UK economy in the three-month period. However, UK services PMI dropped to 49.3 in May from 52.7 in April and the monthly decrease reflects the direction of travel in the short term as wider pressures start to bite.
“The necessity of many professional, scientific and technical (PST) activities means the decrease in output is not as pronounced as in other sectors. However, professional and business services (PBS) as a whole still faces significant challenges, not least the fall out economic impact of the war in Iran which is yet to really be reflected in the numbers. Market volatility and uncertainty around the economic outlook for the rest of 2026 and increasing concerns around the valuation of deals risks investment decisions being delayed.
“Recruitment activity is particularly vulnerable to these challenges, with cost pressures encouraging businesses to tighten their purse strings and adopt a more cautious approach to permanent hiring. The evolving tech and AI landscape continues to disrupt and shift demand for roles, and rising employment costs and regulatory risks driven by the reforms to the Employment Rights Act mean the recruitment subsector is facing significant headwinds.
“However, there is opportunity for recruitment firms to capitalise on the changing employment landscape. RSM’s UK Workforce Survey recently found that over a third (38%) of businesses will look to use more agency workers to deliver flexible resource* amid changing obligations around zero- hours contracts, taking on the additional cost to avoid administrative burdens and legislative risk. This could, in turn, provide a welcome boost for temporary recruitment activity, and help to mitigate the impact of prolonged economic uncertainty and a longer-term decline in permanent roles.”