LONDON: Britain’s economy is losing momentum, knocked by weaker household spending and worries about the global outlook, according to the latest in a string of downbeat business surveys.
Business activity grew at the slowest pace for more than two years in Britain’s dominant services sector last month, according to the closely watched Markit CIPS PMI report.
The authors said it looked as if GDP growth had slowed in recent months and was entering the final quarter of the year at a pace of just 0.3% – less than half the 0.7% seen in the second quarter, according to the most recent official data.
The report’s headline activity index was far weaker than City economists had been expecting. It was 53.3 in September, down from 55.6 in August, the weakest reading since April 2013 and much lower than a consensus forecast for 56.0 in a Reuters poll of economists.
“Weakness is spreading from the struggling manufacturing sector, hitting transport and other industrial-related services in particular. There are also signs that consumers have become more cautious and are pulling back on their leisure spending, such as on restaurants and hotels,” said Chris Williamson, chief economist at survey compilers Markit.
“Wider business service sector confidence has meanwhile also been knocked by global economic worries and financial market jitters.”
The pound weakened against the euro and the dollar after the report, which economists saw as providing further reason for the Bank of England to hold off raising interest rates from 0.5%.
Borrowing costs have been at a record low for more than six years. While the Bank’s governor Mark Carney had recently warned mortgage holders to prepare for a rise in interest rates, economic news since than has pointed to a slowdown in the domestic and global economies.
