The UK’s service sector saw its slowest advance in nine months, a new survey warned today.
The Chartered Institute of Purchasing & Supply’s monthly check on a sector ranging from finance and computing to hairdressers hotels and restaurants is still in healthy territory — well above the 50 no-change mark at 57.6 — but fell for the fifth month in a row to signal the slowest growth since last June.
The slowdown took the gloss off more positive signs in the Bank of England’s credit-conditions survey, which showed a sixth-successive quarter of improving credit availability to businesses and heralded a “significant” rise in availability of lending to businesses and households over the coming quarter. The cooler services sector puts the UK economy on course for growth of 0.7% in the current quarter — on a par with the final three months of 2013 — according to Chris Williamson, chief economist at survey compiler Markit.
He said: “While March saw growth slow across the services, manufacturing and construction sectors, all three continue to expand at very strong rates.”
The rate at which services firms won new work slowed in March although they remain confident.
“Inflation is set to fall further in the coming months, extending this ‘Goldilocks’ period of above-trend growth and falling inflation,” Williamson added.
The Bank’s survey said credit availability had been “driven by an improvement in the economic outlook and increased appetite for risk on the part of lenders”.
Lenders expect a “marked” rise in demand for loans from medium-sized and large companies in the next three months, the survey found.
The cost of credit has fallen sharply for bigger businesses, but small firms have seen no benefit from falling loan costs so far this year.