Services PMI shows Brexit dents British economy

Source: Xinhua| 2019-01-04 22:14:08|Editor: xuxin
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LONDON, Jan. 4 (Xinhua) -- Services purchasing managers' index (PMI) data released on Friday showed that the British economy is now in a low-growth mode as the uncertainties of Brexit hang over it.

The IHS Markit/ CIPS purchasing managers' index (PMI) for the dominant services sector, which represents nearly 80 percent of the economy, recorded 51.2 for December.

This is a slight improvement from the November figure of 50.4, a 28-month low, where above 50 represents growth.

"This indicates subdued GDP growth for the fourth quarter of 2018," Samuel Tombs, chief UK economist at Pantheon Macroeconomics, a London-based financial data analysis firm told Xinhua.

The improved growth in the PMI figure was still weaker than any of the monthly figures in the third quarter, which indicates the fourth quarter of subdued growth which finished on a subdued note.

Reports from survey respondents suggested that Brexit-related concerns were a key factor weighing on business-to-business spending at the end of 2018, according to IHS Markit/CIPS. A number of firms also noted that subdued consumer demand had acted as a brake on sales in December.

Business activity was rising at one of the lowest rates seen over the past two-and-a-half years. New work increased only marginally during December, which contributed to a slowdown in job creation to its weakest since July 2016.

Tombs said: "You can't rule out the economy worsening in Q1 because of political uncertainty as further no-deal preparations are ramped up and businesses and households may defer expenditure to an even greater extent."

But he also added: "It is highly unlikely, provided a deal is reached, that there will be a sustained period of falling GDP growth, we are likely to see just modest growth in both Q4 and Q1 of around 0.2 percent."