Belfast Telegraph

Services sector takes a hit amid impasse

By Ravender Sembhy

The UK's dominant services sector contracted in March for the first time since the Brexit referendum as intense political uncertainty constrains demand and weighs on business sentiment.

The IHS Markit/CIPS UK services purchasing managers' index (PMI) showed a reading of 48.9 in March - lower than the 51.3 recorded a month earlier.

A figure below 50 indicates contraction, and last month's number also came in well below expectations of 50.9. It was the first contraction since July 2016 but, aside from that month, the reading was the joint weakest over the past decade.

Chris Williamson, chief business economist at IHS Markit, said: "A drop in service sector activity indicates that UK GDP contracted in March, with the economy stalling over the first quarter as a whole and at risk of sliding into a deepening downturn in coming months. Both the services and construction sectors are now in decline and manufacturing is only expanding because of emergency stockpiling ahead of Brexit.

"The underlying picture of demand is even worse than the headline numbers suggest."

Survey respondents noted that corporate clients had delayed spending decisions in response to the impasse in Westminster, with MPs unable to break the Brexit deadlock.

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