The British service sector expanded at the slowest pace in eight months in June, and the rate of growth missed economists' expectations, data from a survey by Markit Economics and the Chartered Institute of Purchasing & Supply (CIPS) showed Wednesday.
The seasonally adjusted purchasing managers' index (PMI) for the service sector dropped to 51.3 in June from 53.3 in May, hitting the lowest level since last October. A PMI reading above 50 suggests expansion in the sector, while one below indicates contraction. The sector posted growth for the eighteenth consecutive month.
New business received by service providers increased at a slower pace in June, as the Jubilee holidays reduced market activity. Business confidence was generally lower in June, with the European sovereign debt crisis weighing on sentiment.
Input prices increased notably during the month, drive by increased energy, labor, supplier and travel prices. Employment in the service sector rose for the seventh successive month in June as companies responded to recent rises in workloads.
"The services economy saw one of its worst months since the recovery began three years ago, with the June survey showing signs of growth stalling, "Chris Williamson, Chief Economist at survey compilers Markit said. "The data suggest that the sector grew by only around 0.2% in the second quarter, though the quarterly rate of growth will have slowed close to stagnation in June, boding ill for momentum going into the third quarter."
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