Forexpros – Service sector activity in the U.K. expanded at the slowest rate in eight months in June, adding to concerns over the U.K. economic outlook, industry data showed on Wednesday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index fell by 2.0 points to 51.3 in June from a reading of 53.3 in May.
Analysts had expected the index to decline by 0.3 points to 53.0.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Highlighting growing concerns about the U.K. macroeconomic outlook, business sentiment in the sector fell markedly to hit a six-month low.
Growth has now been sustained for 18 months, but has recently seen a deceleration with the average index level for the second quarter well down on that recorded for the opening quarter of the year.
Temporary factors played some part, with anecdotal evidence suggesting that the net effect of the Jubilee holidays was to reduce market activity. This was offset to some degree by reports of an increase in work ahead of the Olympics.
Commenting on the report, David noble, chief executive officer at the CIPS said, “The euro zone continues to be the biggest drag on business confidence, along with a scarcity of big contracts, and the prospect of a post-Olympics slump in business.”
Following the release of that data, the pound held on to losses against the U.S. dollar, with GBP/USD shedding 0.3% to trade at 1.5641.
Meanwhile, European stock markets were broadly lower. The EURO STOXX 50 shed 0.6%, France’s CAC 40 slumped 0.7%, London’s FTSE 100 declined 0.25%, while Germany’s DAX fell 0.55%.
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