UK service sector growth eases in November

| December 3, 2010 | 0 Comments

Growth in the UK’s closely-watched service sector eased slightly in November but still remained near October’s four-month high.

The latest index from the Chartered Institute of Purchasing and Supply (CIPS)/Markit PMI fell to 53 in November, down slightly from the 53.2 recorded in October.

However, the reading was in line with expectations and the index remains above the crucial 50 level, which indicates expansion.

Meanwhile, the new business index gained in the month to 52.4 from 52 the previous month - the highest reading since June, while business confidence picked up.

The service sector accounts for 70% of the UK economy.

Commenting on today‘s figures, Paul Smith, senior economist at Markit, said: “With the survey’s data on backlogs and confidence pointing to sluggish expansion in the near-term, we expect the sector to make a reduced contribution to UK economic growth in the fourth quarter.”

The figures come shortly after the CIPS/Markit PMI index revealed construction activity improved in November.

The construction PMI rose to 51.8 in November from 51.6 the previous month and surprised analysts who had expected a fall to 51.

Activity in the commercial and civil engineering sectors increased while housebuilding fell for the third consecutive month, the survey showed.

Construction accounts for around 6% of Britain’s economic output.

Also this week, figures revealed UK manufacturing activity unexpectedly grew in November.

The manufacturing PMI rose to 58 in November from an upwardly revised 55.4 in October.

Not only was the reading the highest since September 1994, it confounded analysts expectations of a reading of 54.6.

Again, both indices remain above the crucial 50 mark.

All sets of figures will undoubtedly reinforce the view that the Bank of England will leave interest rates and the quantitative easing (QE) programme on hold when it meets next week.

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