Since July 2016, growth in important services sector in UK has reached the lowest level, giving rise to threats of stagnation. IHS Markit/CIPS’s PMI became 50.4 in November from 52.2 the previous month, where a number above 50 shows expansion. Chris Williamson of IHS Markit said that the results of the survey indicate a stop in economic growth. 80% of UK’s economy is accounted for by the services sector. Such a low index was last seen during the period following the referendum vote for Brexit. The week’s earlier surveys presented less gloomy results in construction and manufacturing industries. October readings for manufacturing and construction PMI indicated a rise from 51.1 to 53.1 and 53.2 to 53.4 respectively.
The biggest part of UK economy is constituted by services sector, which also serves as the driving force behind it. This engine is now almost stalling with the slowest growth rate ever in the services sector in 6years. It has been reported that without work backlogs to tackle activities would have decreased last month. Reasons behind this inertia are lessened global demand and prolonged uncertainties regarding Brexit trading arrangements. With the fall in UK markets, American and other markets have peaked. Even with trading arrangements that’ll be made, external demand levels may become more challenging for businesses. Hiring plans have been affected and service companies have been less optimistic for over 2years. This survey suggests that economic growth may be as less as 0.1% in this quarter, indicating the slowest growth this year in the time following crisis.
Mr Williamson has demanded clarity in matters surrounding the Brexit arrangements. Samuel Tombs of Pantheon Macroeconomics stated that the decline is clearly indicating how the drainage of economic momentum is being caused by Brexit uncertainties. He further said that BOE’s prediction that economy will grow by 0.3% might have been ‘too upbeat’ and that a tiny reduction in GDP mustn’t be ruled out completely as unlikely. Ruth Gregory of Capital Economics referred to the situation as ‘disappointing’.