U.K. Service Sector Growth Eases Slightly In December
January 06 2016 - 2:25AM
RTTF2
Although the British service sector expanded at a solid pace in
December, underpinned by a sharp rise in new business, the pace of
growth eased slightly from November as expectations fell to a near
three-year low.
The Purchasing Managers' Index dropped slightly to 55.5 from
55.9 in November, survey data from Markit and the Chartered
Institute of Procurement & Supply revealed Wednesday. The
reading was forecast to drop to 55.6.
Nonetheless, the PMI remained above the long-run survey trend of
55.2. Also, the current period of rise in output was extended to
three years, as the measure remained above the 50-neutral mark.
The headline figure averaged 55.4 in both third and fourth
quarters, representing a weaker growth outcome in the second half
of 2015.
"The surveys point to the economy having grown 0.5 percent in
the fourth quarter, a solid but perhaps unexciting pace that means
GDP would have risen 2.2 percent in 2015," Chris Williamson, chief
economist at Markit, said.
Elsewhere, Capital Economics economist Vicky Redwood said there
was clearly no reason for the central bank to raise interest rates
soon with the recovery having lost some of its shine in 2015 and
the further fall in oil prices having weakened the near-term
outlook for inflation even more.
Data showed that the service sector growth was underpinned by a
further strong increase in new business as firms reported
successful marketing campaigns. On the other hand, the volume of
outstanding business increased at the sharpest rate since
August.
The current sequence of employment growth in the service sector
was extended to three years in December, but the pace of job
creation was the weakest since July.
Firms' expectations for activity over the forthcoming twelve
months were the weakest since February 2013. Solid overall growth
in activity is expected for 2016, but the strength of sentiment
remained weaker than the long-run survey average.
Due to higher wages, average input prices registered the
strongest growth in five months.
That said, input price inflation remained historically muted. At
the same time, prices charged by service providers rose only
marginally in December.
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