LONDON: Growth across British services companies slowed sharply in December and was its weakest since mid-2013, according to a survey that underscored how the country’s economic recovery lost more pace at the end of last year. The Markit/CIPS UK Services Purchasing Managers’ Index (PMI) suffered its biggest decline in more than three years in December, falling to 55.8 from 58.6 in November to touch its lowest level since May 2013.
The slowdown was sharper than all the forecasts by economists in a Reuters poll that had predicted a little-changed reading of 58.5. Still, the index remained comfortably above the 50 mark that signals growth.
Survey compiler Markit said the PMI signalled Britain’s economy grew by 0.5 percent in the last three months of 2014, slowing from 0.7 percent in the third quarter.
“The loss of momentum towards the year end will no doubt fuel worries that the upturn is too fragile to withstand higher interest rates,” said Chris Williamson, Markit’s chief economist.
Only two of the Bank of England’s nine rate setters have voted to raise rates from their record low 0.5 percent since last August. Economists and financial markets have pushed back expectations for a first rate hike deep into this year.
Four months ahead of a national election, the latest batch of business surveys may also perturb finance minister George Osborne’s Conservative Party.
Hopes that Britain’s economic recovery will become less reliant on big-spending consumers ebbed further last Friday when data showed growth in the manufacturing sector weakened at the end of last year and lending to individuals soared.
While this might be a cause for concern in the longer term, for now the PMIs signalled a decent rate of economic growth.
