UK service sector growth remains sluggish in March

UK service sector growth remained sluggish in March as global economic uncertainty and worries about the upcoming EU membership referendum undermined business expectations.

The Markit/CIPS UK services purchasing managers’ index rose to 53.7 from February’s 35-month low of 52.7, but fell short of expectations for a reading of 54.0.

The index remained below its long-run average of 55.2 and the average for the first quarter of 2016 of 54.0 was the lowest of any quarter since Q1 2013, Markit said.

Markit’s chief economist, Chris Williamson, said: “Business confidence remains in the doldrums as concerns about the global economy continue to be exacerbated by uncertainty at home, with nerves unsettled by issues such as Brexit and the prospect of further government spending cuts announced in the Budget.

“It therefore seems unlikely that March’s upturn in the pace of growth represents the start of a longer term upswing. In contrast, the survey data suggest growth is more likely to weaken further in the second quarter. With the PMI already in territory traditionally associated with the Bank of England choosing to loosen policy, interest rate hikes seem a long way off.”