Service sector output in slump
Service sector output suffered its biggest slump in over a year in April following the Royal Wedding and an extra public holiday that month, official data showed.
The Office for National Statistics said that output contracted by 1.2 per cent in April after a 0.8 percent increase in March, driven by a sharp fall in wholesale activity.
The fall in services output was the biggest since January 2010, when heavy snow caused disruption, but economists are unlikely to draw many conclusions about the sector’s performance later in the quarter due to the special factors at play.
“It should be noted that April 2011 was an unusual month for a number of reasons,” the ONS said, citing the effect of the Royal Wedding and the extra public holiday.
The last time there was an extra public holiday to mark the Royal Wedding, services output fell 2.1 percent on the month, with wholesale activity again contracting sharply.
April also brought the warmest weather for that month since records began, which the ONS said may have contributed to the growth in the retail, hotels and restaurant and transport sectors.
The service sector, which makes up three quarters of Britain’s economy, grew at its fastest pace since early 2007 in the first three months of 2011, and was the main factor keeping the economy out of recession. The first quarter’s 0.9 percent growth rate was maintained in the three months to April.
Separately, the ONS said that workers’ productivity across the whole economy had improved in the first three months of 2011, rising by 0.1 per cent after dropping 0.3 per cent at the end of 2010. Unit labour cost growth slowed to 0.5 per cent from 1.2 per cent, easing inflation pressures.