UK Economy close to stagnation

UK Economy close to stagnation
Business activity picks up, but employment falls at fastest pace in over 7 years

The UK ecomony is close to stagnation and on course to grow just 0.1% in the first quarter, according to the latest UK Sevices PMI.

A subdued start to 2019 has continued into February, with business activity expanding only marginally and a modest upturn in the service sector.

UK Services PMI Business Activity Index registered 51.3 in February, up from a two-and-a-half year low of 50.1 in January, but leaving it on track for its weakest quarter since Q4 2012.

Employment fell at its fastest pace since November 2011, with businesses delaying the hiring of staff due to concerns about the near-term economic outlook.

Uncertainty surrounding Brexit remains the most prominent factor in holding back business growth in February. Reports show the political uncertainty has encouraged delays to corporate spending decisions and a general rise in risk aversion among clients.

Chris Williamson, Chief Business Economist at IHS Markit said: “The latest PMI surveys indicate that the UK economy remained close to stagnation in February, despite a flurry of activity in many sectors ahead of the UK’s scheduled departure from the EU. The data suggest the economy is on course to grow by just 0.1% in the first quarter.”

“Worse may be to come when pre-Brexit preparatory activities move into reverse.”