Services PMI: Growth in the UK's largest sector missed the mark in November as prices rose

 
Emma Haslett
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Growth in the services sector fell unexpectedly. (Source: Getty)

Growth in the UK's dominant sector missed expectations in November, a closely-watched index has shown.

IHS Markit's purchasing managers' index for the services sector fell to 53.8 in November, down from 55.6 in October and below expectations of 55. However, the figure was still well above the key level of 50: any figure below that suggests a contraction in the sector.

The report showed although optimism in the sector increased, growth in business activity fell off its six-month high, while increases in volumes of new work eased.

Costs also increased, with survey respondents saying they had to pay more for energy, food, fuel, imported items and staff.

“Slower service sector growth comes as a disappointment after the improved performances of both manufacturing and construction in November," said Chris Williamson, IHS Markit's chief business economist.

"However, despite the weaker service sector expansion, the latest survey data indicate that the economy is on course to enjoy robust growth in the fourth quarter. The survey data are so far consistent with the economy growing at a quarterly rate of 0.45 per cent in the closing months of 2017."

Howard Archer, chief economic adviser to the EY Item Club, added: "There was disappointing news on the prices front in November. Prices charged by services companies picked up for a fifth month running in November to be at the highest level since February 2008.

"Input prices picked up in November and were among the strongest since the first half of 2011 as they were lifted by increased costs for energy, food, fuel, imported items and staff salaries"

Read more: The UK's construction sector smashed expectations last month

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