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.
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.
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