UK services sector frozen by weakest performance since Brexit vote after disruption from heavy snow
Activity in the UK services sector last month fell to 51.7 from 54.5 in February, according to the Markit/CIPS purchasing managers’ index out today.
The 51.7 reading of activity in March marks the weakest service sector performance since July 2016.
March data signalled a slowdown in business activity growth across the UK service sector, though respondents to the survey did say that snow disruption and the unusually bad weather conditions for the month had been “a key factor” holding back business activity growth.
IHS Markit’s chief business economist said first quarter economic growth is likely to have been buffeted by the poor weather too.
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“The PMI surveys collectively signal a quarterly GDP growth rate of just under 0.3 per cent, down from 0.4 per cent in the fourth quarter, albeit with the rate of growth sliding to just 0.15 per cent in March alone.” said Chris Williamson.
Employment growth slipped to a three-month low, with numbers rising “at only a moderate pace” in March. The rate of job creation was the slowest reported so far for the year.
Companies reporting a rise in staffing levels pointed to efforts to boost operating capacity and long-term expansion plans. However, tight labour market conditions had led to difficulties filling vacancies for some survey respondents.
Williamson, chief business economist at IHS Markit, said:
The UK economy iced up in March, suffering the weakest increase in business activity since the Brexit vote amid widespread disruptions caused by some of the heaviest snowfall in years.
He added that the latest dip was comparable to prior months when there has been heavy snow in the UK, so it is unlikely to switch up policymakers’ view on the overall picture for the economy.
“The indications of solid employment growth and stubbornly high price pressures therefore leave a widely-touted May rate hike very much in play,” Williamson said.
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