U.K. Services Slow as Economy Shows Signs of Losing Momentum
The dominant services sector in Britain grew at least four months in June, adding that the economy is so weak that Brexit negotiations begin in earnest.
The IHS Markit purchasing managers index fell to 53.4 compared to 53.8 in May, Mark said in London on Wednesday. Economists polled in a Bloomberg News poll had forecast a reading of 53.5, above the 50 level that separates the expansion from the contraction.
The survey follows factory reports and construction of IHS Markit earlier this week that showed that both industries were refreshing. The companies are calling on Prime Minister Theresa May to give priority to the economy in talks to leave the European Union after losing its parliamentary majority in an early election.
Markit Chris Williamson economist at IHS said while three surveys indicate a 0.4% economic growth in the second quarter – double the previous three months – momentum decreases.
“The risks pointing to the economy slowed in the third quarter,” Williamson said. “The overall picture is one of corporate spending, investment and exports had not given enough momentum to fully offset the slowing consumption.”
The report highlights the dilemma of the Bank of England while the pound decline plunged inflation above target, prompting some officials to demand higher interest rates. The majority voted to maintain some record pace last month fearing that the economy is not yet strong enough for a tighter policy.
Other security services are clearly marked since May, and respondents are concerned about Brexit negotiations, the economy and political uncertainty, according to IHS Markit.
Orders from service providers increased at their slowest pace in nine months. Anecdotal evidence indicates that spending has been hampered by soustrauites “and consumer confidence, while national elections on June 8 led some clients to delay decisions, said IHS Markit.
However, the pace of job creation was the fastest since 14 months and some companies have commented on difficulties in recruiting staff, he said.
The services report also showed that higher production costs and higher average prices declined, with “intense competition” hampering it.