Forexpros – Service sector activity in the U.K. fell more-than-expected in August, posting the biggest drop in more than a decade as an increasingly fragile economic environment undermined confidence and gains in new business, data showed on Monday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index fell by 4.3 points to 51.1 in August from 55.4 in July.
Analysts had expected the index to decline to 54.3 in July.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Activity rose to the least extent of 2011 so far and confidence in the future was the weakest in a year.
Increased caution amongst service providers and evidence of spare capacity led to another slight fall in employment.
Commenting on the report, Paul Smith, senior economist at Markit said, “Allied with soft manufacturing data and a slowdown in construction growth, the overall picture provided by the latest PMI surveys is one of a stuttering U.K. private sector.â€
Following the release of that data, the pound extended losses against the U.S. dollar, with GBP/USD falling 0.54% to trade at 1.6131.
Meanwhile, European stock markets were down sharply. The EURO STOXX 50 tumbled 2.3%, France’s CAC 40 dropped 2.45%, the FTSE 100 fell 1.55%, while Germany’s DAX plunged 2.55%.
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