Service sector growth slows in February

Image copyright Getty Images

Growth in the UK's service sector eased to a five-month low in February, according to a closely-watched survey.

The Markit/CIPS purchasing managers' index (PMI) for services fell to 53.3, down from 54.5 in January. However, it remains above the 50 threshold that separates growth from contraction.

Markit estimates the economy will grow by 0.4% in the first quarter of 2017.

Services, which include areas such as finance and legal advice, make up more than three-quarters of the UK economy.

"A further slowdown in UK business activity growth in February adds to evidence that the economy has lost momentum after the impressive expansion seen at the end of last year," said Chris Williamson, chief business economist at IHS Markit.

"Inflationary pressures remained the highest for six years as firms struggled with rising costs associated with the weak pound, but optimism about the year ahead remained elevated by recent standards," he added.

Paul Hollingsworth, UK economist at Capital Economics, said: "Looking ahead, the economy faces a number of headwinds including higher inflation and uncertainty surrounding the future relationship with the EU as formal negotiations get underway."

"However, we continue to think that the UK will weather these well, and expect GDP growth of 1.8% in 2017 and 2.5% in 2018."

BBC

Get the latest news delivered to your inbox

Follow us on social media networks