Forexpros – Service sector activity in the U.K. expanded at a slower rate than expected in April, falling to the lowest level since November, industry data showed on Thursday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index fell by 2.0 points to 53.3 in April, from 55.3 in March.
Analysts had expected the index to decline by 0.7 points to 54.6 in April.
The index has now registered readings above 50.0 for 16 consecutive months, although a fall from March’s 55.3 pointed to the weakest expansion since last November.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
The underlying performance of the U.K. service sector remained positive in April, with activity, new business and employment all recording growth. Expectations also remained positive, reaching a twenty-five month high, although margins were again under pressure.
Commenting on the report, Chris Williamson, chief economist at Markit said, “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,” he added.
Following the release of that data, the pound held on to modest losses against the U.S. dollar, with GBP/USD shedding 0.18% to trade at 1.6171.
Meanwhile, European stock markets were broadly higher. The EURO STOXX 50 jumped 1.1%, France’s CAC 40 rose 1.1%, London’s FTSE 100 added 0.45%, while Germany’s DAX advanced 0.95%.
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