Service sector growth slower than expected
Business in the service sector grew more slowly than expected in April as clients remained cautious, although firms’ optimism rose to a two-year high and hiring picked up pace, a survey showed.
Combined with slower growth in manufacturing and construction, the data will fuel talk that the Bank of England may overcome its reluctance to inject more monetary stimulus into the economy, which has plunged into recession again around the turn of the year according to official figures.
The main Markit/CIPS Purchasing Managers’ Index (PMI) for the service sector – measuring the change in business activity such as income or chargeable hours worked – fell to 53.3 from 55.3 in March.
That was the lowest reading since November and compared to analysts’ forecasts for a smaller drop to 54.2, although the index still remained above the 50-mark that separates growth in activity from a decline.
PMI surveys earlier this week showed that manufacturing and construction also expanded, albeit less than in March.
“From what we are hearing from panelists, this certainly does not sound like an economy in recession,” said Chris Williamson, chief economist at Markit, which compiles the surveys.
“The PMI surveys suggest that the economy will have expanded again in April, and that the recent gloomy official data pointing to a downturn in the first quarter will eventually be revised to show modest growth.”