UK service sector slows denting hopes for post-election pickup; Sterling slips
Growth in Britain’s key services sector have slowed, according to fresh data, which spurred concerns about the economy’s ability to bounce back from the weak start to the year.
The key Purchasing Managers Index for May fell to 56.5, down from 59.5 in April. Being well above the 50 that marks expansion, it was the weakest reading for four months. Analysts had expected the index to tick down to 59.2.
Similar surveys showed weakness in the U.K. manufacturing sector and a recovery in the construction sector this month. Taken together the data shows that the U.K. economy only grew at a quarterly rate of 0.4% in May, Markit said.
GBP/USD was down 0.43% to 1.5278.
David Noble, chief executive of the Chartered Institute of Procurement and Supply, said: “Momentum in the sector stalled in May, with the drop in the headline index the biggest fall for almost four years and likely to cause concern as services remains the UK’s largest driver of economic growth.”
According to analysts, a slowdown in services is especially worrisome, because with real wages finally rising after stagnating for several years, services firms, from hairdressers to architects, should be benefiting from consumers’ increased spending power.
As the Guardian reports, the survey echoes the data compiled by the Office for National Statistics which reflected a weakening in the pace of services growth.
