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UK Service Sector Growth Near 1-Year Low


The British service sector expanded at the slowest pace in almost a year in August as subdued client demand and heightened uncertainty about the domestic economic outlook weighed on business activity.

The services Purchasing Managers' Index fell more-than-expected to 53.2 in August from 53.8 in July, survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed Tuesday. The expected reading was 53.5.

The score signaled the slowest pace of growth since September 2016. Nonetheless, the index remained above the 50.0 no-change value for the thirteenth consecutive month.

"A slowdown month as the services sector comes off the boil, challenged by a general unwillingness to spend and invest, alongside fragility in confidence amongst consumers as a result of Brexit," Duncan Brock, Director of Customer Relationships at CIPS, said.

The survey suggests that the economy is struggling to re-accelerate in the third quarter, after a disappointing first half of the year, Paul Hollingsworth, a UK economist at Capital Economics, said.

However, there are still some good reasons to expect growth to pick up a little pace, the economist added.

The survey revealed that new order volumes increased at the second-slowest rate since September 2016. Despite a slowdown in new business growth, data highlighted renewed pressures on operating capacity and backlogs of work grew the most since July 2015.

Service providers responded to rising workloads and pressures on operating capacity by recruiting additional staff in August.

The rate of input price inflation picked up further from May's recent low and was the fastest for six months. The latest rise in service sector charges was the fastest since April.

Data revealed that service providers' business confidence edged up to a three-month high. Companies expecting a rise in business activity over the next 12 months generally cited organic growth, resilient client spending and new product launches.

by RTTNews Staff Writer

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