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UK services industry index falls to lowest level since Brexit vote

The UK services sector saw growth ease to a 28-month low in November spelling bad news for the wider economy, according to a recent IHS / Markit survey.

City of London
Source: Bloomberg

UK service sector companies have witnessed another difficult month in November with business activity and new work growth the weakest the industry has seen in nearly two and half years, according to a recent IHS / Markit survey.

The slowdown in business activity growth is highlighted by a decline in HIS Markit’s services purchasing managers’ index, which fell to 50.4 from 52.2 in October, representing the biggest slide since the Brexit referendum vote in 2016.

UK economy ‘flatlining’

The sharp deterioration in service sector growth leaves the UK economy flatlining in November, with Brexit uncertainty intensifying amid a global economic slowdown, Chief Business Economist at IHS Markit Chris Williamson said.

‘Measured across services, manufacturing and construction, the survey results suggest that the pace of economic growth has stalled,’ Williamson said.

‘The surveys are so far consistent with 0.1% GDP growth in the fourth quarter, thanks to the expansion seen back in October, but growth momentum has since been lost and risks are clearly tilted to the downside.’

Brexit indecision to blame for slowdown

November is the third consecutive month that service sector growth has slowed and with the industry accounting for roughly four-fifths of the UK economy, an expansion decline signals bad news for country.

‘With the lowest optimism about the future since July 2016 and minimal job hiring, the main driver of the UK economy looks like it’s grinding to a halt as it teeters too close to the no change mark for comfort,’ Group Director at the Chartered Institute of Procurement & Supply Duncan Brock said.

‘Respondents have provided plenty of evidence that the prime cause of this slowdown must be firmly placed on the shoulders of Brexit indecision,’ he added.

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