UK Markit services PMI weaker, matches expectations

The services sector activity in the UK economy showed a further deceleration in July, with both services output and new business falling at the fastest rates since March 2009, a fresh report from Markit Economics showed on Tuesday.

As Markit reports, “The Business Activity Index fell to 47.4 in July, from 52.3 in June, signalling a fall in UK services output. This was the first contraction since December 2012, and the rate of decline was the strongest since March 2009. Moreover, the month on-month decline in the Index in the latest period, at 4.9 points, was the largest observed since the survey began in July 1996.

Chris Williamson, Chief Economist at Markit, noted: “The marked service sector downturn follows news from sister PMI surveys showing construction activity suffering its steepest decline since mid- 2009 and manufacturing output contracting at the fastest rate since late-2012. At these levels, the PMI data are collectively signalling a 0.4% quarterly rate of decline of GDP.”

“It’s too early to say if the surveys will remain in such weak territory in coming months, leaving substantial uncertainty over the extent of any potential downturn. However, the unprecedented month-on-month drop in the all-sector index has undoubtedly increased the chances of the UK sliding into at least a mild recession.”