Financial News

  • 7 January 2014, 12:11

PMI Service Sector Growth Slows Unexpectedly

Growth in Britain's services sector slowed unexpectedly in December, according to a new survey.

The monthly services purchasing managers' index (PMI), compiled by data company Markit, fell to a six-month low of 58.8 in December.

It was a drop from November's level of 60.0, and varied from a poll of economists ahead of the survey release.

Despite the dip sector confidence rose and the economy still looks likely to have recorded its strongest expansion since 2007.

Nonetheless, the figure remains well above the 50 mark that separates growth from contraction.

And businesses' confidence about the future rose to the highest level since March 2010 at 73.5, helped by expanding order books.

"More strong growth looks likely as we move into 2014," Markit chief economist Chris Williamson said.

"It is perhaps inevitable, however, that we may see the rate of growth slow compared with the unusually strong pace seen in recent months."

Both the manufacturing and construction PMIs fell last week.

Markit said a composite index of the three PMIs dropped to 59.5 in December from 60.4 - its lowest level since July.

Britain's economy grew at an annualised rate - a measure calculated across a full 12 months - of more than 3% in the second and third quarters of 2013.

That is well above the long-term average of just over 2%.

Mr Williamson said the PMIs pointed to an even faster rate of growth in the final three months of 2013.

When fourth-quarter GDP data is published by the Office of National Statistics on January 28, Markit said it could well show that output for 2013 as a whole grew by 1.9%.

If so, it would be the fastest growth since the start of the financial crisis in 2007.

That is more than forecast by the Bank of England, the International Monetary Fund or the Government's budget watchdog, and marks a sharp turnaround from the start of last year, when Britain seemed at risk of slipping back into recession.

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