UK Service Sector Expands at Slowest Rate in 2 Years

The engine of Britain’s economic growth slipped a gear in August after the services sector expanded at its slowest rate for two years.

In another sign that the UK economy is losing momentum, the Markit/Cips survey of the services sector, which generates more than three-quarters of Britain’s income, found a broad slackening in activity and a decline in the confidence of businesses in the outlook for the rest of the year.

Coming quickly on the heels of gloomy manufacturing figures, the latest health check of the services industry was worse than analysts had expected.

The Markit/Cips purchasing managers’ index (PMI) of services activity dropped to a 27-month low of 55.6 from 57.4 in July. Readings above 50 signal growth in activity compared with the previous month, and below 50 contraction.

The consultancy Capital Economics said the slowdown was likely to be a blip before momentum picked up again in the autumn as falling oil prices lifted household disposable incomes and eased price pressures on businesses.

But the fall in confidence was blamed by some analysts on the turmoil in world markets and the protracted slowdown in China, which has become a major export market for advertisers and other services firms. Without China as the motor for global trade, some economists fear the UK’s recovery will falter.

via The Guardian

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza