Services sector shock sparks downturn fear
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An influential survey indicating that the service sector has been shrinking has sparked fears the UK could be heading for a downturn.
The sector, which accounts for 80% of the UK economy, unexpectedly shrank for the first time in almost three years last month, the survey indicates.
The purchasing managers’ index from IHS Markit/CIPS fell to 48.9 in March from 51.3 in February, below forecasts.
Any figure below below 50 shows a contraction in the sector.
It is the first time the index has fallen below 50 since July 2016, which was immediately after the UK voted to leave the European Union.
IHS Markit’s chief economist Chris Williamson said its survey indicated the UK economy shrank in March and had stalled over the first quarter as a whole.
He said it was now “at risk of sliding into a deepening downturn in coming months”.
“A stalling of the economy in the first quarter will therefore likely turn into a downturn in the second quarter unless demand revives suddenly which, given the recent escalation of Brexit uncertainty, seems highly improbable,” he added.
