Services sector sees slowest growth since mid-2013

The UK service sector saw weaker growth last month, as the pace of economic recovery slowed across the country’s key business sectors.

The December Markit/CIPS Purchasing Managers’ Index (PMI) growth tracker showed the lowest rate of expansion in services since mid-2013.

It follows similar results in construction and manufacturing, suggesting progress made by British business in 2014 was dampened as the year closed.

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The results present a “mixed bag of news” on the UK’s economic health that will add further uncertainty to future interest rate rise, Chris Williamson, chief economist at Markit, said.

However, while the overall pace of economic growth was the weakest in just over a year and a half, Mr Williamson said it is too early to become worried by the slowdown as the index ratings remain strong.

The headline Business Activity Index for services fell from 58.6 in November to 55.8 in December, reflecting insufficient capacity and lower enquiry levels compared to earlier in the year.

Despite the slowdown in activity, companies remained confident for 2015’s prospects and employment rates continued to grow at a marked pace.

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Growth in UK services continued to outpace that in Germany and France last month. Germany’s Business Activity Index remained static at 52.1, while France’s rose to 50.6, the highest in nine months. Readings below 50 reflect contraction.

In the US, output growth eased to a 10-month low in December, reflecting the slowest upturn in new work in two years.

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