The UK service industry and shown its lowest level of growth since July 2013. This comes with news that the manufacturing sector has seen a similar drop.
According to the Markit/CIPS UK Services Purchasing Manager’s Index (PMI) the industry is currently at a rate of 57.6 for March. While this is down on previous months, it’s still safely in the growth zone which is anything about 50.
This is now the 5th consecutive month for the rate to be showing it’s lowest growth since June last year. While this is not a good thing, there’s no suggestion growth will disappear entirely any time in the near future. Investors on the other hand will be paying close attention.
Unlike the manufacturing industry, the service sector has seen a reducing rate of employment growth. One the plus side, volume rates have been growing at a good rate, although this has started to fall too.
Chief Economist at Markit, Chris Williamson, said: “While March saw growth slow across the services, manufacturing and construction sectors, all three continue to expand at very strong rates, meaning the economy looks to have grown by at least 0.7% in the first quarter.
“With prices charged for services barely rising, and the exchange rate reducing the cost of imports, inflation is set to fall further in the coming months, extending this “Goldilocks” period of above-trend growth and falling inflation.”
“Policymakers will be concerned that growth could ease further if sterling continues to appreciate, but there’s no evidence to suggest that any slowdown will be anything other than modest, adding to indications that the UK is set to see growth outpace its peers in 2014.”
Image by Friedrich Wahle.