The UK services sector has suffered the biggest dent in its growth since 2011 in what could be a sign of a weakening recovery, causing the pound to drop 0.4 per cent against the dollar. This took the exchange rate to $1.5275 for every pound.
The Markit/CIPS purchasing manager’s index, a measure of growth in different sectors of the economy, fell to 56.5 points from 59.5 in May. Any score above 50 indicates growth.
The fall was a steep one: growth hasn’t slowed by as much since August 2011. The rate itself represents the lowest growth in four months. The services sector is vital to the UK’s economy, representing around 75 per cent of economic activity. This means the drop is a worrying one - analysts have indicated it could indicate the death of the economic recovery.
Chris Williamson, chief economist at Markit, said the index “raised doubts about the ability of the economy to rebound convincingly from the weakness seen at the start of the year”.
However, there are reasons to postpone feelings of impending dread: the fall was slightly mitigated by data showing companies still intend to hire more staff, meaning the jobs market should remain robust.
The weakness, Markit said, could well be down to uncertainty surrounding the General Election, and a rebound could come later in the year.