UK services industry growth almost stagnant, say economists | Business News

Britain’s giant services industry returned to growth last month, but the marginal recovery indicates the UK economy continues to stagnate.

The IHS Markit/CIPS UK services purchasing managers’ index (PMI) showed a reading of 50.4 in April, higher than the 48.9 recorded a month earlier. A figure above 50 indicates growth.

The small rise had been expected by economists and marks a return to growth following March’s decline in the run-up to the original Brexit deadline.

However, March and April together marked the weakest two months for the British services sector, which spans banks to hairdressers, in more than six years.

Chris Williamson, chief business economist at IHS Markit, which compiles the survey, said: “A near-stagnant service sector in April means that all three major parts of the economy were struggling to grow in April.

“Although the service sector joined construction in reporting a return to growth, in both cases the expansions were only marginal.

“An upturn in manufacturing is, meanwhile, showing signs of waning, as a temporary boost from Brexit-related stockpiling faded in April.”

The PMI showed new orders contracted for a fourth month in a row, the longest period of decline since the global financial crisis.

Job creation also remained low, making the recent phase of staff hiring the weakest since the end of 2012.

Overall, the PMI showed a picture of many businesses subdued by ongoing uncertainty about the terms of Britain’s withdrawal from the European Union.

Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking, said: “This month’s return to growth is welcome but services businesses are unlikely to be breathing a sigh of relief quite yet.

“Last month we saw the first reduction in activity in more than two-and-a-half years and the relative shortness of supply chains in services means that these figures can be volatile as they react quickly to events.”