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UK services sector in decline

The UK services sector growth declined in April, following strong figures in March.

The index was measured at 54.2 for April, down from 55.3 in March. Anything above 50 represents growth.

Commenting on the figures Richard Driver, analyst for Caxton FX said: “It’s no great surprise to see UK services sector growth having declined from its strong showing in March and this suggests Q1 has got off to a fairly uninspiring start.

“This is the weakest UK services figure since last November but looking at the figure on a global scale, the sector is in truth performing pretty solidly.”

PMI figures released this week for the manufacturing, construction and services sectors were all above 50, which is a better result that much of the Eurozone.

Many now have high hopes for a boost from the Olympics this summer, and while this is likely to be delivered, it may not to be the extent many are anticipating.

He continued: “This latest figure is probably sufficient to prevent the MPC from introducing yet more quantitative easing at next week’s meeting.

Mr Driver continued: “David Miles’ dovish stance has been strengthened by the recent ‘double-dip’ headlines but the rhetoric out of the Bank of England does suggest that the rest of the committee is more concerned with high UK inflation than with broadly flat lining UK growth.

“Of course, it goes without saying that further QE from the BoE will follow if UK growth continues trending down.”

Graeme Leach, chief economist at the Institute of Directors, said: “This latest survey and the recent money supply figures reinforce the IoD’s view that the economy is softening.

“The continued euro-crisis and a technical recession in the UK are dampening consumer and business confidence just when it needs rocket fuel.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .