Markit PMI: Service sector meltdown as growth falls to lowest in three years on Brexit fears

Emma Haslett
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A waiter prepares a Bloody Mary cocktail
Services is the UK's dominant sector (Source: Getty)

The UK's services sector showed the weakest growth in three years in February, new figures have shown.

The purchasing managers' index for the UK's dominant sector fell to 52.7 in February, down from 55.6 in January, a report by Markit showed. Any figure above 50 denotes growth.

Analysts had expected the figure to dip slightly, to 55.1 - but the scale of the fall will come as a surprise to many.

There was some light at the end of the tunnel: Markit added that the longer-term outlook for activity improved slightly from January's three-year low to the joint-strongest in five months.

But expectations remained weaker than trends shown in 2013, 2014 and 2015, it added.

“Despite rising slightly from January’s three-year low, business confidence in the service sector remained at a level which has historically presaged an imminent slowing in the economy to near stagnation or worse in coming months," said Chris Williamson, chief economist at Markit.

"Firms are worried about signs of faltering demand, but boardrooms have also become unsettled by concerns regarding the increased risk of Brexit, financial market volatility and weak economic growth at home and abroad."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added the figure is the "clearest indication yet that uncertainty created by the EU referendum is hurting the economy".

"Both the business activity index and new orders index fell to their lowest levels since March 2013. The slight rise in the backlogs of work index, to 50.8 in February from 49.0 in January, and future activity index, to 68.3 from 67.5, suggests growth in activity likely will pick up marginally soon."

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