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Britain's services sector growth slows

Wednesday, October 03 09:34:59

Britain's service sector growth slowed in September and services providers shed jobs for the first time in 10 months, a survey showed today, casting more doubt over the chances of a sustained recovery. The drop in the services Purchasing Managers' Index (PMI) to 52.2 from 53.7 in August was larger than economists had forecast. The soft services survey rounds up a set of disappointing PMIs, which pointed to outright contraction in manufacturing and construction. The composite index of the three surveys fell to 51.1 from 52.2, showing only marginal growth for the economy.

The PMI pointed to underlying quarterly economic growth of just 0.1 percent in the third quarter, said Chris Williamson, chief economist at survey compiler Markit. "Official data are likely to show a stronger GDP rebound, reflecting a technical bounce-back from second quarter weakness arising from extra Jubilee holidays," he said. "But the PMI provides an insight into the underlying trend of the economy, and warns of near stagnation."

The surveys will fuel the view that the Bank of England will extend its asset purchases once the current 50 billion pound round is completed in November, but they are unlikely to be weak enough for the BoE to announce any action at its meeting on Thursday. ( C) Reuters