A 'creeping doubt' is dragging down the dominant sector of Britain's economy

LONDON — Britain’s services sector, which accounts for more than 75% of the country’s GDP, saw its performance stutter in June as ‘creeping doubt’ triggered by uncertainties around the Brexit negotiations and domestic political situation drag on confidence, the latest PMI data from IHS Markit shows.

The services sector — which includes everything from banking to waiting tables — drew a reading of 53.4 in the month, down from the previous 53.8 score in May, and lower than the forecast of 53.5 provided before the release.

“A creeping doubt appears to be the cause of this month’s below par performance as the UK’s departure from the EU and the unpredictable political climate continues to impact on consumers and businesses alike,” Duncan Brock, Director of Customer Relationships at CIPS — which helps compile the survey — said.

“UK service providers indicated another slowdown in business activity growth during June, which largely reflected the weakest upturn in new work since September 2016,” IHS Markit said in a statement.

“Survey respondents commented on subdued business and consumer confidence, alongside some instances of delayed decision making around the election.”

The purchasing managers index (PMI) figures from IHS Markit are given as a number between 0 and 100.

Anything above 50 signals growth, while anything below means a contraction in activity — so the higher the number is, the better things look for the UK.

Here’s the chart:

Wednesday’s numbers confirm a hat-trick of worse than expected PMI data for the UK this week, after both manufacturing and construction came in below forecasts on Monday and Tuesday respectively.

“The end of the second quarter saw manufacturers report further expansions of both production and new order volumes. However, rates of increase decelerated, as growth of new business slowed in both the domestic and export markets,” IHS Markit said of the manufacturing sector on Monday.

Here’s what IHS Markit’s Chief Business Economist Chris Williamson said about Wednesday’s numbers:

“A slowing in services sector growth completes a triple-whammy of disappointing PMI survey readings. Although the three PMI surveys are running at levels that are historically consistent with GDP growing by around 0.4% in the second quarter, it’s clear that the economy heads into the third quarter losing momentum.”

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