The latest services purchasing managers index (PMI), a monthly release showing activity in the service sector, fell to 53.3, down two points from March. A figure above 50 indicates growth in the sector, making this the 16th straight month in which the service sector has grown – although it was the weakest expansion since November.
Chris Williamson, Chief Economist at Markit, who compile the survey, said:
The service sector started the second quarter on a weaker note than in the first quarter, but continued to grow at a reasonable pace. Companies continued to report rising levels of new business, which helped drive confidence to the highest for over two years. From what we are hearing from panellists, this certainly does not sound like an economy in recession.
Even though the weaker services growth follows similar slowdowns in manufacturing and construction, the PMI surveys suggest that the economy will have expanded again in April, and that the recent gloomy official data pointing to a downturn in the first quarter will eventually be revised to show modest growth.
The big question is whether the data are weak enough to encourage the Bank of England to provide further stimulus to the economy. It is likely that the MPC may wait until more information is available on both output and inflation, but these numbers will add weight to the view that the economy needs a further dose of medicine to help get growth back on course.