Published: Tue, December 05, 2017
Money | By Armando Alvarado

Economic Buzz: UK Service Sector Growth Slows In November

Economic Buzz: UK Service Sector Growth Slows In November

The dominant services sector lost some momentum in November while prices charged by companies rose at their fastest pace in almost 10 years, potentially adding to the country's inflation problem, a closely watched survey showed.

The closely watched Markit/CIPS UK Services PMI (pdf) slipped from its six-month peak in October of 55.6 to 53.8 in November, missing economists expectations for a result of 55.

However, the level of business sentiment in the service sector towards the 12-month outlook for output rose to the strongest since July. However, the figure was still well above the key level of 50: any figure below that suggests a contraction in the sector.

The warning comes as business activity in November grew at a slower pace than in October, amid a slight slowdown in new work available to services firms.

The snapshot of the largest sector in the economy will worry consumers already caught by weak wage growth and rising inflation. The reading came in weaker than a flash estimate of 54.9, which had shown a slight pickup in momentum.

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Neither German Chancellor Angela Merkel's struggle to form a governing coalition nor Catalonia's vote to separate from Spain have left significant marks on the 19-nation euro economy so far, which is heading for its best annual performance in a decade.

At the same time, the Indian service sector dipped into contraction territory during November, following growth in the previous two months.

"The euro zone enjoyed a bumper November, setting the scene for a buoyant end to the year", said Chris Williamson, chief business economist at IHS Markit.

"The Caixin PMI readings in November showed the economy has maintained stability, and there was no imminent risk of a significant decline in the growth rate", said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

Williamson said the data were consistent with fourth quarter economic growth of 0.8% for the euro zone, faster than many of its peers and more optimistic than the 0.6% predicted by a Reuters poll last week.

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