UK service sector growth declines further in August

Wednesday, 04. September 2019 10:30

The United Kingdom's Business Activity Index (PMI) value came in at 50.6 for August, according to a release from IHS Markit/CIPS published on Wednesday. The seasonally adjusted figure, which signalled only a marginal expansion of service sector output, fell from July's reading of 51.4 and was the lowest reading since June, well below the long-run average of 54.9.

Survey respondents cited continued Brexit uncertainty and subdued corporate spending as the most important factors for the drop. Work backlogs were reduced for the eleventh consecutive month, representing the longest period of decline since 2011/12. On a positive note, intense competition for new work meant that prices charged by service providers increased at the slowest pace for just over three years.

"Business activity in the service sector almost stalled in August as Brexit-related worries escalated, curbing spending by both businesses and consumers," chief business economist at IHS Markit Chris Williamson said. "After surveys indicated that both manufacturing and construction remained in deep downturns in August, the lack of any meaningful growth in the service sector raises the likelihood that the UK economy is slipping into recession," he added.

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