Business

UK service sector growth 'slows'

Office workers in London
Image caption The service sector will not create enough jobs to offset government cuts, the survey suggests

The UK service sector grew slightly less strongly in November compared with the previous month, a closely-watched survey suggests.

The purchasing managers' index (PMI) fell to 53, down from 53.2 in October.

The figure suggests the service sector will contribute less to economic growth in the final quarter, said Markit, which helps to compile the survey.

Earlier this week, PMI figures showed the manufacturing sector growing at its fastest pace in 16 years.

Any figure above 50 in the PMI index, which is compiled by the Chartered Institute of Purchasing & Supply together with Markit, indicates growth.

Mixed picture

Market said growth in the service sector remained subdued, while indicators pointed to slow growth ahead.

"With the survey's data on backlogs and confidence pointing to sluggish expansion in the near-term, we expect the sector to make a reduced contribution to UK economic growth in the fourth quarter," said Paul Smith, senior economist at Markit.

He added that the current growth trend suggests the sector will not generate any "meaningful job growth" to help offset jobs cuts in the public sector as a result of government spending cuts.

This is in marked contrast with the manufacturing sector, where output is rising thanks to strong exports and employment is being created at "a record rate", Mr Smith said.

However, despite the slowdown in service sector growth, analysts were not downbeat.

Alan Clarke at BNP Paribas said the figure highlighted the fact that domestic demand was falling behind demand for exports.

"Overall not a bad number. Take the two surveys together and the economy is powering towards the end of the year in reasonable fashion."

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