11192017

UK service sector growth slows

Waiter, LondonImage copyright
Getty Images

Growth in the key UK service sector slowed last month, according to a closely-watched survey.

The purchasing managers’ index (PMI) for the sector from Markit/CIPS fell from 53.5 in May to 52.3 in June. This matched April’s figure, which was the lowest since February 2013.

A figure above 50 indicates the sector is expanding.

The results reflect the “intensified” anxiety over Brexit in the run-up to the referendum, Markit said.

Almost 90% of the data was collected before the referendum result was known.

“The PMI surveys indicate that the pace of UK economic growth slowed to just 0.2% in the second quarter, with a further loss of momentum in June as Brexit anxiety intensified,” said Chris Williamson, Chief Economist at Markit.

“A further slowing, and possible contraction, looks highly likely in coming months as a result of the uncertainty created by the EU referendum.”

The data on the service sector follows Monday’s weak report on the UK’s construction industry.

The Markit/CIPS construction purchasing managers’ index fell to 46.0 in June, its lowest level since June 2009. It had been 51.2 in May.

Rate cut ahead?

“[The] services survey was thankfully not as bad as the construction survey released yesterday. But it was not that good either and suggests that the economy struggled to grow much at all in Q2,” said Ruth Miller, UK economist, at Capital Economics.

“However, there is scope for policymakers to respond to any weakness in the economy ahead. We think that a cut in interest rates in the near term looks likely and possibly a re-starting of the Bank of England’s quantitative easing purchases,” she said.

Markit’s purchasing managers’ index for UK manufacturing, released last week, showed a slight pick-up in June from May.

What Next?

Recent Articles

Leave a Reply

You must be Logged in to post comment.