Service sector growth slows

The country's dominant service sector grew less than expected in April after hitting a 13-month high in March, a survey showed, suggesting the economy failed to pick up speed after its sluggish start to the year.

The Markit/CIPS headline services PMI index eased to 54.3 in April from 57.1 in March, staying in positive territory for a fourth straight month, but undershooting the 55.7 forecast.

The survey, taken with downbeat manufacturing and construction PMIs earlier this week, suggest GDP growth is running at a quarterly rate of just 0.4 per cent, Markit's chief economist Chris Williamson said.

That is even lower than the sluggish 0.5 per cent growth rate recorded in the first quarter after a shock contraction at the end of last year.

"The service sector suffered a sharp loss of growth momentum at the start of the second quarter," Williamson said. "The deterioration in the sector's performance can be largely linked to government spending cuts."

The coalition government has staked its reputation on eliminating the budget deficit, which has swollen to 10 per cent of GDP, by the time of the next election in 2015.

PMI surveys earlier this week showed manufacturing expanded at its slowest pace in seven months in April and construction growth slowed sharply after two robust months.

Excluding December's snow-related drop, the services PMI headline index for April saw its largest decline since October 2008 and was blamed mainly on government spending cuts.

The services sector saw average prices charged rise more steeply in April, with the index jumping to 53.8 from 52.2 in March, its strongest reading since September 2008.