View the article online at http://citywire.co.uk/wealth-manager/article/a648451
UK on course for growth squeeze as services demand slides
by Sarah Miloudi on Jan 04, 2013 at 10:00
The UK has suffered its first reduction in service sector output since December 2010, as expectations for the year ahead remain downbeat.
According to the latest Markit PMII data the level of incoming new work has slipped back for the first time in two years, and a contraction in UK growth is on the cards.
The headline index from the survey – the seasonally adjusted Business Activity Index – also fell and came in at 48.9 in December, down from its reading of 50.2 for November.
'General uncertainty over the direction of the economy and the lack of client expenditure weighed on the sentiment of service providers during the latest survey,' Markit said, while Capital Economics believes the gloomy reading implies a fall in fourth quarter GDP.
The consultancy's chief UK economist Vicky Redwood said the Business Activity Index had moved down for four consecutive months, adding that rather than focusing on Olympic demand unwinding, the lower readings are more likely suggesting underlying weakness.
Redwood said: A weighted average of the business surveys remains consistent with a renewed contraction in GDP in Q4...we still expect a 0.4% fall.'
Howard Archer, of IHS Global Insight, said the survey was 'very disappointing'.
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop
More about this:
On the road
by James Phillipps on Jul 23, 2014 at 14:34