Published: Thu, July 06, 2017
Markets | By Erika Turner

UK Service Sector Growth Eases On Weak New Orders

UK Service Sector Growth Eases On Weak New Orders

Business conditions in India's service sector continued to improve in June as a solid and accelerated upturn in new work resulted in a faster increase in activity. The strong performance in June also suggests that GDP growth is likely to rebound from the poor showing in the fourth quarter of financial year 2016-17, according to the report's author, Pollyanna De Lima.

Today's data followed on from weaker manufacturing and construction surveys, completing a triple-whammy of disappointing PMI survey readings. IHS Markit's quarterly revenue was up 54.1% on a year-over-year basis.

The European single currency gained against the US dollar Wednesday after private sector data showed the region's economy capped its best quarter in at least six years, adding to investor bets that interest rates are set to rise from their record lows as the recovery finds its feet.

Anything above 50 signals growth, while anything below means a contraction in activity - so the higher the number is, the better things look for the UK. At the composite level, new work increased at a modest pace that was the slowest recorded in nine months.

A sister survey on Monday showed growth in Indian factory activity slowed in June, with the PMI reaching a four-month low amid a slowdown in output and softer domestic demand. The rate of charge inflation was the joint-quickest in one year, on par with that seen in February, though marginal overall.

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"Amid reports of higher prices paid for food and fuel, average cost burdens at services firms increased further in June", it said.

Among components, output, new orders, employment and stocks of purchases all registered declines in June.

Tim Moore, senior economist at IHS Markit, said: "Fragile business sentiment led to delayed decision-making on large projects and greater concern about the outlook for workloads during the next 12 months".

With services being the prevalent sector in India, the slighter rise in manufacturing was more than offset and growth of private sector output climbed to an eight-month peak.

"Companies [are] blaming a still weak economic environment, a strong currency, high competition and rising costs for the pessimism", said Bernard Aw, an economist at Markit, the financial information service provider that compiled the index. In June, the PMI stood at 51.1, up from 50.5 in May.

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