UK services PMI slumps to 38-month low in April
UK service sector growth slumped to a 38-month low in April, according to figures released on Thursday.
The Markit/CIPS UK services purchasing managers’ index fell to 52.3 in April from 53.7 in March, its lowest since February 2013 and below economists’ expectations for a reading of 53.6.
The index has averaged 55.2 since its inception in July 1996.
New business growth picked up slightly but remained relatively subdued, while business optimism was the joint-weakest in over three years.
Chris Williamson, chief economist at Markit, said: “The slowdown in the service sector follows similar weakness in manufacturing and construction to make a triple-whammy of disappointing news on the health of the economy at the start of the second quarter.
““The PMI surveys are collectively indicating a near-stalling of economic growth, down from 0.4% in the first quarter to just 0.1% in April.”
Williamson added that there was an increase in the number of companies reporting that uncertainty about the upcoming EU referendum led customers to hold back on purchases.
David Morrison, senior market strategist at SpreadCo, said: “So now we’ve seen a pull-back in UK Services alongside a contraction in manufacturing and a significant drop in construction. As with the Manufacturing and Construction PMIs, the Services PMI has been trending down for the last couple of years.
“The weak UK data comes on top of disappointing numbers from the US and China. So seven years on from the nadir of the financial crisis we once again have a slowing global economy only propped up by unprecedented waves of central bank monetary stimulus.”
Howard Archer, chief European and UK economist at IHS Economics, said: “Not only did the purchasing managers report services activity at a 38-month low in April, but other elements of the survey were weak, thereby pointing to further muted activity in the near term.
“We are now taking down our forecast for UK GDP growth in the second quarter to just 0.2% quarter-on-quarter (from 0.3% quarter-on-quarter). This would be the weakest expansion since the fourth quarter of 2012 and down from 0.4% quarter-on-quarter in the first quarter of 2016 and 0.6% in the fourth quarter of 2015.”