U.K. Services Growth Cools as Prices Charged Pick Up Sharply
(Bloomberg) -- U.K. services growth slowed in November from the fastest pace in six months as price pressures intensified.
The services Purchasing Managers Index fell to 53.8 from 55.6 in October, IHS Markit said on Tuesday. Economists had forecast a reading of 55.0. Input costs increased the most since 2011 and prices charged rose at the fastest clip since 2008.
While the U.K. economy is on track to expand about 0.5 percent in the fourth quarter, higher oil prices and the depreciation of the pound since the Brexit vote are keeping a lid on optimism, Markit said. Service providers reported that they passed on higher costs of food, fuel, imports and salaries.
“The survey data suggest that inflationary pressures have yet to peak,” said Chris Williamson, chief business economist at IHS Markit. “Uncertainty about the economic outlook, linked commonly to Brexit worries, continued to permeate the business mood in November.”
The Bank of England raised interest rates for the first time in a decade last month, citing the economy’s reduced potential to grow without fanning inflation. Yet with the expansion still on delicate footing, they said any further hikes would be limited and gradual.
The composite PMI figure slipped to 54.7 in November from 55.4 the previous month. A gauge of manufacturing gained to the highest in more than four years as exports were bolstered by the pound’s deprecation.
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