Wednesday, 5 December 2012

Triple-Dip Recession fears grow as UK Service Sector Stalls

Disappointing PMI data adds to fears economy on course to sink into Recession  for third time since financial crisis hit in 2007

Coming only hours before George Osborne delivered his autumn statement, the figures added to fears the UK economy is on course to sink back into recession for the third time since the financial crisis hit in 2007.

The Markit purchasing managers index (PMI) found that the services sector slowed to 50.2 from 50.6 in October. The index, which measures the output, orders and employment, shows that a sector is growing when figures exceed 50.

More worryingly, the index for future orders fell to 49.6 from 52.9 in October.

Chris Williamson, Chief Economist for the UK and Europe at Markit, said the fall in services PMI was a blow to the economy and showed the third quarter's growth surge had run out of steam.

The services sector, which accounts for around 75% of the economy, has proved to be the government's only consolation in the last two years of flat growth, offsetting periods of falling manufacturing and construction output.

Services firms have been hit by low consumer confidence, the government's austerity cuts and the eurozone crisis, which has dented exports.

Howard Archer, at IHS Global Insight ,said the figures were "very disappointing, and highlight the problems the chancellor faces in his autumn statement".

The survey covers transport, storage and communication, financial intermediation, business services, personal services, computing and IT, and hotels and restaurants, but not the retail sector.
The PMI survey covers services such as hairdressing, transport, business services, IT, hotels and restaurants. Photograph: Martin Argles for the Guardian
Further evidence Britain may be sliding towards a triple-dip recession came on Wednesday with figures showing the all-important services sector stalled in November.

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