UK service sector slowdown continues, PMI data shows

Image caption The service sector is a key part of the UK economy

Growth in the UK's service sector slowed to an eight-month low last month, according to a survey.

The Markit/Cips purchasing managers' index (PMI) for the service sector fell to 51.3, down from 53.3 in May. A reading above 50 indicates growth.

The extra Jubilee holidays and weak demand were behind the slowdown.

Analysts said the weak figures meant the Bank of England was more likely to expand its quantitative easing (QE) programme on Thursday.

There is speculation that the Bank will expand QE by another £50bn when its monetary policy committee meets this week, in an attempt to boost growth.

The slowdown in service sector growth last month came despite firms cutting prices, the survey found.

"The services economy saw one of its worst months since the recovery began three years ago, with the June survey showing signs of growth stalling," said Chris Williamson, chief economist at Markit.

"The data suggest that the sector grew by only around 0.2% in the second quarter, though the quarterly rate of growth will have slowed close to stagnation in June, boding ill for momentum going into the third quarter.

"The services PMI probably cements the case for further stimulus from the Bank of England."

Earlier in the week, similar surveys from Markit indicated that the manufacturing sector had contracted in June, although at a slower pace than the month before, while activity in the construction sector fell at the fastest pace for two and a half years.

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