The fragility of Britain’s reliance on its mammoth services industry was laid bare this morning by the latest Markit/CIPS purchasing managers’ index (PMI), which showed growth in the sector will not be enough to translate into confidence about the wider economy.
Services scored 53.7 on the bellwether index, where scores above 50 indicate expansion, rebounding from a shock three-year low of 52.7 in February. But Markit, which compiles the scores, warned it was still “below its long-run average of 55.2” - rounding off the weakest quarterly performance since early 2013.
“Business confidence remains in the doldrums as concerns about the global economy continue to be exacerbated by uncertainty at home, with nerves unsettled by issues such as Brexit and the prospect of further government spending cuts announced in the Budget,” said Chris Williamson, Chief Economist at Markit.
The scores give an early indication that the UK economy may have expanded by between 0.3 - 0.4 per cent in the first quarter of 2016, down from 0.6 per cent growth at the end of last year.
The results also showed prices for services rose at their fastest rate for two years, hinting at an uptick in inflation. That figure is currently running at just 0.3 per cent, as wages grew and businesses reported the cost of rent and fuel were on the up.