Services growth slowdown to hit UK economy, according to study

Pace of services sector growth is slowing. Picture submitted.

Pace of services sector growth is slowing. Picture submitted. - Credit: Getty Images

Britain's economic growth is expected to slow in the third quarter after the powerhouse services sector grew at its weakest pace for more than two years in August, according to new figures.

The latest Markit/CIPS Purchasing Managers' Index (PMI) survey for the services sector, which accounts for more than three quarters of UK growth, showed a reading of 55.6 last month. A figure above 50 indicates growth.

Last month's reading is down from 57.4 in July and marks the worst performance since May 2013, driven by a sharp slowdown in new business.

Markit chief economist Chris Williamson said the services data, combined with PMI surveys from the construction and manufacturing sectors over the past two days, points to weaker growth overall in the economy in the three months to September.

He is forecasting growth of 0.5% in the third quarter, down from 0.7% in the previous three months.

This comes after the Markit/CIPS 'all sector' PMI showed its weakest reading since May 2013, at 55.3 in August, down from 56.7 in July.

Mr Williamson said: 'The three Markit/CIPS PMI surveys are collectively pointing to the weakest monthly expansion for over two years.'

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'As such, the economy looks set to grow by 0.5% in the third quarter, down from 0.7% in the three months to June, with the ongoing upturn almost entirely dependent on the service sector, aided by the far smaller construction sector,' he added.