UK services sector shows British economy close to flat-lining

The British services sector saw subdued growth in February, signalling the UK economy is close to stagnating just weeks away from Brexit.

British Commuters Source: Bloomberg

Growth in the UK services industry was subdued in February, with activity expanding marginally and new business falling for the second consecutive month, according to IHS Markit’s Purchasing Managers Index (PMI).

The British services sector accounts for around 80% of total economic output and around 83% of workforce jobs, with stagnating growth in the industry an indicator of weaker growth in the UK economy just weeks ahead of Brexit.

UK economic growth flatlining ahead of Brexit

The latest PMI survey suggests that the UK economy is close to stagnation in February, despite a burst of activity in many sectors ahead of Britain’s departure from the European Union on March 29.

In fact, the data indicates that the UK economy is on course to grow by just 0.1% in the first quarter of this year.

‘Worse may be to come when pre-Brexit preparatory activities move into reverse,’ Chief Business Economist at IHS Markit Chris Williamson said. ‘Many Brexit-related headwinds and uncertainties also look set to linger in coming months even in the case of PM May’s deal going through.’

‘Global economic growth meanwhile remains sluggish, adding an increasingly gloomy backdrop to the UK’s current problems,’ he added.

The headline seasonally adjusted IHS Markit UK services PMI registered 51.3 in February, up from a two-and-a-half year low of 50.1 in January. February data leaves the index on track for its weakest quarter since Q4 2012.

UK services sector sees further job losses in February

Brexit indecision has hit the UK services sector hard, with a fall in new business and employment in February with that trend is likely to continue in March as the industry heads for its weakest quarter since late-2012.

‘Job losses continued in February, as businesses held back on hiring without the confidence of new pipeline work and ability to recruit skilled candidates,’ Group Director at the Chartered Institute of Procurement & Supply Duncan Brock said. ‘Staffing levels were down at the fastest rate in over seven years.’

‘In signs of more economic stress, intense competition and discounting strategies prevented output price inflation gathering pace, falling to its lowest for five months,’ he added.

Trading around Brexit

Find out how the UK’s exit from the EU continues to affect traders, and discover:

  • The unique opportunities in a ‘hard’ and ‘soft’ Brexit
  • The markets you should be watching
  • Everything that’s happened so far

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.


IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Please see important Research Disclaimer.