Service sector at three-year low
A "disappointing" slowdown in the powerhouse services sector suggested the economy slumped to its lowest ebb for more than three years in July.The Markit/CIPS survey for services activity, in which a reading above 50 represents growth, came in at 51, down from 51.3 in May and its lowest reading for 19 months.
But following data earlier this week showing a worsening contraction in the manufacturing sector and only slight growth in construction, the combined reading for all three sectors showed a decline for the first time since April 2009, with a reading of 49.5.
Although some of the decline in the services sector was caused by wash-out weather and disruption in the run-up to the Olympics, the grim data will fuel fears that the UK may struggle to pull out of its double-dip recession, which is already the longest in more than 50 years.
The gloomy readings from the Markit/CIPS survey are particularly worrying because until recently they have been considerably more upbeat than official data provided by the Office for National Statistics.
Many economists have accused the ONS of underestimating the strength of the economy and have questioned its figures showing that GDP - a broad measure of the economy - has declined for three quarters in a row.
Markit chief economist Chris Williamson said temporary factors worsened the picture in July but he pointed to a steep loss in exports created by weak global demand.
The services sector, which accounts for some 75% of the economy, showed the weakest growth since heavy snowfall disrupted business in December 2010.
The main bright spot in the survey was an increase in employment for the eighth month in a row, but backlogs of work fell at their fastest rate since November 2011.
Mr Williamson said job creation across the three sectors was its fastest for three months in July but warned the market will worsen if the economy continues to decline.
Many economists have accused the ONS of underestimating the strength of the economy and have questioned its figures showing that GDP - a broad measure of the economy - has declined for three quarters in a row.
Markit chief economist Chris Williamson said temporary factors worsened the picture in July but he pointed to a steep loss in exports created by weak global demand.
The services sector, which accounts for some 75% of the economy, showed the weakest growth since heavy snowfall disrupted business in December 2010.
The main bright spot in the survey was an increase in employment for the eighth month in a row, but backlogs of work fell at their fastest rate since November 2011.
Mr Williamson said job creation across the three sectors was its fastest for three months in July but warned the market will worsen if the economy continues to decline.
© 2013 Press Association