BCC: Slow services sector activity could hamper growth

| July 6, 2010 | 0 Comments
”BCC:

A survey by the British Chambers of Commerce (BCC) has revealed the UK economy is likely to have grown in the second quarter but serious concerns remain.

The lobby group, which surveyed 5,600 businesses across the country, is forecasting growth of between 0.6% and 0.7% for the three months to the end of June.

However, the UK’s key service sector presents a worry, according to the BCC.

Figures yesterday revealed growth in the UK’s closely-watched service sector slowed in June and hit its lowest level in 10 months.

The latest index from the Chartered Institute of Purchasing and Supply (CIPS)/Markit PMI showed a reading of 54.4 in June, down from 55.4 in May.

Not only did this represent the lowest level since August last year, it was also weaker than forecasts of a reading of 55.0.

In the meantime, the BCC said manufacturing exports rose to their highest level for almost four years as a result of a “more competitive exchange rate”. However, its members reported sluggish growth in retail and services.

Commenting, David Frost, the director general of the BCC, said: “With very austere times ahead, no one should kid themselves into thinking that the UK’s economic recovery is totally secure.”

Furthermore, the BCC believes unemployment is yet to reach its peak, predicting the figure to reach 2.65 million. UK unemployment currently stands at 2.471 million.

In terms of economic growth, the Office for National Statistics (ONS) was due to publish its third and final estimate of the UK’s first quarter GDP figures last week, but due to a “potential error”, the data will be delayed.

According to the ONS, the unusual move was caused by concerns over the reliability of some of the data.

Gross Domestic Product (GDP), a key measure of economic growth, is closely watched by economists as an indication of the health of the economy.

The ONS will now publish its third and final estimate of first quarter economic growth on July 12, while the first estimate for second quarter growth will be published later this month.

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