UK service sector grows for second month

The UK service sector, encompassing retail, financial and professional services, continued to grow for the second month running in June, albeit at a slower pace than the previous month.

A monthly index of growth from the Chartered Institute of Purchasing and Supply (CIPS) dropped to 51.6 from 51.7 in May. A reading above 50 denotes growth, the lower the number, the slower the growth.

The reading was against analysts’ expectations of another substantial rise in the index, perhaps beyond the 52 mark. CIPS said the recovery was tempered by shrinking demand for new business and more job cuts.

Experts said the results should temper expectations of a swift recovery. "The sideways movement in the headline business activity index in part reflects some consolidation," said Paul Smith, senior economist at Markit.

"Nonetheless, the underlying data indicate that the business climate remains fragile with tight lending conditions and rising unemployment remaining key threats to continued service sector recovery."

The UK economy went into freefall at the beginning of 2009, shrinking at its fastest rate since the 1950s. But more positive survey data since has bolstered hopes of a return to growth by the third quarter of the year.

In related news, shop sales in the Eurozone, which Britain is not part of but British businesses have a significant stake in, fell 0.4 per cent in May, reversing a slight upward trend the month before.

The figures came after a slowdown in spending on Europe’s high streets and mounting job losses, according to the figures from Eurostat.

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By News Desk  on   Jul 03,2009

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Keywords

services    service sector    CIPS    UK service sector    economy    growth    recovery   

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