U.K. Service Sector Logs Weakest Growth Since 2013
03 September 2015 - 9:58AM
RTTF2
British services sector expanded at its weakest rate in over two
years casting doubt about sustainability of economic growth into
third quarter, a closely watched survey revealed Thursday.
The services Purchasing Managers' Index dropped to 55.6, which
was the weakest score since May 2013, survey results from Markit
Economics and the Chartered Institute of Procurement & Supply
showed.
That was in contrast to economists' expectation for a modest
improvement in the reading to 57.7 from 57.4 in July. The growth
slowed for second straight month.
A PMI score above 50 indicates expansion in the sector and the
latest reading remained above the long-run survey average of 55.2.
Further, activity has now grown for 32 consecutive months, which
was the second-longest sequence of growth since the survey started
in July 1996.
The economy looks set to grow by 0.5 percent in the third
quarter, down from 0.7 percent in the three months to June, with
the ongoing upturn almost entirely dependent on the service sector,
Chris Williamson, chief economist at Markit, said.
The construction sector sustained its growth momentum in August,
while manufacturing expansion slowed from July, survey results from
Markit showed this week.
IHS Global Insight's Chief UK Economist Howard Archer said, the
overall weak set of PMI survey results will likely fuel the belief
that the Bank of England will not be raising rates until well into
2016.
Business received by service providers rose for the
thirty-second straight month in August. Nonetheless, the pace of
expansion slowed since July to the weakest since April 2013.
Despite the slowing in the growth pace, services firms added
more staff during August and at a faster rate than July's recent
low. Though, the rate of job creation was slower than those
registered during the first half of 2015.
Inflationary pressure on input costs eased further as input
price inflation slowed for a third straight month to hit the
weakest since January. At the same time, prices charged by service
providers rose only marginally, the survey said.
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