British Service Sector Growth At 38-Month Low
May 05 2016 - 4:06AM
RTTF2
The U.K. service sector activity expanded at the slowest pace in
more than three years in April largely reflecting economic
uncertainty ahead of the referendum on EU membership, survey data
from Markit showed Thursday.
The Chartered Institute of Procurement & Supply/Markit
services Purchasing Managers' Index fell more-than-expected to 52.3
in April from 53.7 in March. A reading above 50 indicates
expansion.
The current 40-month sequence of uninterrupted growth was the
second longest in the survey history.
Nonetheless, the rate of expansion slowed for the third time in
the past five months to reach its lowest level since February 2013.
The expected score was 53.5.
The survey suggests that economic growth will soften further in
the near term, perhaps until the uncertainty surrounding the EU
referendum is resolved, Scott Bowman at Capital Economics,
said.
"The deterioration in April pushes the surveys into territory
which has in the past seen the Bank of England start to worry about
the need to revive growth, either by cutting interest rates or
through non-standard measures such as QE," said Chris Williamson,
chief economist at Markit.
Although new business growth picked up slightly, it remained
relatively subdued and business optimism was the joint-weakest in
over three years, Markit said. Firms delayed placing new contracts
citing concerns over the forthcoming referendum.
The level of outstanding business dropped for the second time in
2016 so far, reflecting the ongoing relatively weak growth in new
business.
At the same time, service sector employment increased at the
weakest pace in over two-and-a-half years, underlining the overall
subdued nature of business conditions in the sector.
Input costs hit a 27-month high in April, largely due to the
introduction of the national living wage. That said, input cost
inflation stayed below the long-term average, and firms raised
their own prices at a subdued pace.
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