This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2019/apr/03/trade-war-optimism-markets-china-us-service-sector-business-live
The article has changed 7 times. There is an RSS feed of changes available.
| Version 4 | Version 5 |
|---|---|
| UK economy risks 'deepening downturn' as Brexit hits service sector - business live | UK economy risks 'deepening downturn' as Brexit hits service sector - business live |
| (30 minutes later) | |
| The AFP newswire blames “Brexit turmoil and flat economic growth” for the news that Britain’s “vital services sector” has shrunk for the first month in almost three years. | |
| The March 2019 reading shocked economists because market expectations had been for a drop in the index - which is regarded as a crucial barometer of UK business activity - to 50.9 [not the 48.9 recorded] | |
| “The latest UK services PMI makes it clear that the economy is being hit hard by all the uncertainty in surrounding Brexit,” noted ING economist James Smith. | |
| He added: “Of course, it’s important to remember that PMIs don’t always precisely reflect the extent of a slowdown, merely that an increasing number of firms are reporting worsening conditions. | |
| “That said, this latest reading implies that the first quarter as a whole could see near-stagnant growth.” | |
| Alpesh Paleja, the CBI’s principal economist, agrees that Britain’s services companies are now struggling: | Alpesh Paleja, the CBI’s principal economist, agrees that Britain’s services companies are now struggling: |
| Both the PMIs and @CBItweets growth indicator are consistent with activity slowing to a halt in Q1. The anecdote from both is the same: Brexit uncertainty holding back pipelines of work, corporate sending decisions and household confidence. https://t.co/ki6paCY11K | Both the PMIs and @CBItweets growth indicator are consistent with activity slowing to a halt in Q1. The anecdote from both is the same: Brexit uncertainty holding back pipelines of work, corporate sending decisions and household confidence. https://t.co/ki6paCY11K |
| The UK’s service sector slump comes just as rival firms across the Channel are picking up. | The UK’s service sector slump comes just as rival firms across the Channel are picking up. |
| Germany’s services economy, for example, grew at its fastest rate in six months. Its latest PMI index came in at a punchy 55.4 this morning, much stronger than the UK’s 48.9 [reminder: 50 points = stagnation]. | Germany’s services economy, for example, grew at its fastest rate in six months. Its latest PMI index came in at a punchy 55.4 this morning, much stronger than the UK’s 48.9 [reminder: 50 points = stagnation]. |
| This week’s PMI reports show that the services sector is underperforming the rest of the economy. | This week’s PMI reports show that the services sector is underperforming the rest of the economy. |
| While the UK service sector contracted unexpectedly in March (with a PMI of just 48.9), manufacturing expanded much faster thanks to stockpiling (its PMI jumped to 55.1). | While the UK service sector contracted unexpectedly in March (with a PMI of just 48.9), manufacturing expanded much faster thanks to stockpiling (its PMI jumped to 55.1). |
| Construction suffered a small contraction, with a PMI of 49.7 last month. | Construction suffered a small contraction, with a PMI of 49.7 last month. |
| Mix it all together....and you see that the UK’s private sector flatlined in March, in the worst quarter in over six years. | Mix it all together....and you see that the UK’s private sector flatlined in March, in the worst quarter in over six years. |
| Worryingly, UK services companies have now reported falling new orders for three months running. | Worryingly, UK services companies have now reported falling new orders for three months running. |
| That hasn’t happened since 2009 -- when the world economy had plunged into recession. | That hasn’t happened since 2009 -- when the world economy had plunged into recession. |
| Markit says export demand was “particularly subdued”, which suggests the recent slowdown in the global economy is also hurting the UK. | Markit says export demand was “particularly subdued”, which suggests the recent slowdown in the global economy is also hurting the UK. |
| #UK #services #PMI shows new business contracted for 3rd month in a row in March; 1st time for this since Q1 2009. Businesses reported to be deferring or cancelling spending amid intense #Brexit uncertainties, #consumers limiting discretionary spending. Export demand fell | #UK #services #PMI shows new business contracted for 3rd month in a row in March; 1st time for this since Q1 2009. Businesses reported to be deferring or cancelling spending amid intense #Brexit uncertainties, #consumers limiting discretionary spending. Export demand fell |
| Some service sector companies will be doing well out of Brexit uncertainty -- such as lawyers, whose billable hours must have spiked as clients seek advice. | Some service sector companies will be doing well out of Brexit uncertainty -- such as lawyers, whose billable hours must have spiked as clients seek advice. |
| But many others are hunkering down, explains Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking, | But many others are hunkering down, explains Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking, |
| “Although there are still sub-sectors that are doing well in the current circumstances – such as some parts of professional services that thrive amid uncertainty – many others are opting to conserve cash, limit investment and keep a tight eye on costs until the fog lifts. | “Although there are still sub-sectors that are doing well in the current circumstances – such as some parts of professional services that thrive amid uncertainty – many others are opting to conserve cash, limit investment and keep a tight eye on costs until the fog lifts. |
| “Only when firms do get some greater clarity and can begin to plan properly again will we see how much of the current challenges are caused by underlying trends, such as slowing global growth, and how much is down to a temporary stall in confidence.” | “Only when firms do get some greater clarity and can begin to plan properly again will we see how much of the current challenges are caused by underlying trends, such as slowing global growth, and how much is down to a temporary stall in confidence.” |
| Simon Harvey of Monex Europe says the services reports shows that Brexit anxiety is hurting UK businesses: | Simon Harvey of Monex Europe says the services reports shows that Brexit anxiety is hurting UK businesses: |
| Services sector hindered by lack of investment due to Brexit and a tight labour market. Discounting the July 2016 result, this was the joint lowest services PMI of the decade. @graemewearden this doesn't make for good reading as Brexit continues to drag. | Services sector hindered by lack of investment due to Brexit and a tight labour market. Discounting the July 2016 result, this was the joint lowest services PMI of the decade. @graemewearden this doesn't make for good reading as Brexit continues to drag. |
| Lee Hardman of MUFG bank points out that the 2016 EU referendum result also spooked businesses, but activity did hold up OK. | Lee Hardman of MUFG bank points out that the 2016 EU referendum result also spooked businesses, but activity did hold up OK. |
| Sharp drop in UK services #PMI will heighten concerns #Brexit uncertainty is beginning to weigh more heavily on growth. Markit noted it was consistent with stagnating growth in Q1. One caveat is that sentiment also fell sharply around the referendum but activity did not. #GBP pic.twitter.com/SSIGEXEdvc | Sharp drop in UK services #PMI will heighten concerns #Brexit uncertainty is beginning to weigh more heavily on growth. Markit noted it was consistent with stagnating growth in Q1. One caveat is that sentiment also fell sharply around the referendum but activity did not. #GBP pic.twitter.com/SSIGEXEdvc |
| Reuters reports that: | Reuters reports that: |
| Britain’s economy looks likely to shrink over the coming months after Brexit worries caused the dominant services sector to contract for the first time in nearly three years. | Britain’s economy looks likely to shrink over the coming months after Brexit worries caused the dominant services sector to contract for the first time in nearly three years. |
| UK headed for downturn as Brexit worries hammer services sector: PMI https://t.co/jyt0O0mNYc pic.twitter.com/fBqiXt6Zhv | UK headed for downturn as Brexit worries hammer services sector: PMI https://t.co/jyt0O0mNYc pic.twitter.com/fBqiXt6Zhv |
| The PMI report also shows that some UK firms have been forced to slash prices to boost sales. | The PMI report also shows that some UK firms have been forced to slash prices to boost sales. |
| Good news for consumers, but a worrying sign for economic growth.... | Good news for consumers, but a worrying sign for economic growth.... |
| Stalling UK economic growth has been accompanied by the weakest rise in selling prices for goods and services since July 2016, according to the #PMI surveys. March saw an increased number of firms offering discounts to stimulate demand. Suggests #CPI will fall in coming months pic.twitter.com/7i7yg2P8vn | Stalling UK economic growth has been accompanied by the weakest rise in selling prices for goods and services since July 2016, according to the #PMI surveys. March saw an increased number of firms offering discounts to stimulate demand. Suggests #CPI will fall in coming months pic.twitter.com/7i7yg2P8vn |
| Duncan Brock of the Chartered Institute of Procurement & Supply is very alarmed by the contraction in the UK service sector last month: | Duncan Brock of the Chartered Institute of Procurement & Supply is very alarmed by the contraction in the UK service sector last month: |
| He blames the Brexit deadlock: | He blames the Brexit deadlock: |
| New orders fell for the third consecutive month and a drop in overall business activity for the first time in two and a half years has left the services sector facing a bleak near-term outlook. | New orders fell for the third consecutive month and a drop in overall business activity for the first time in two and a half years has left the services sector facing a bleak near-term outlook. |
| “Worried consumers fearful of rising living costs stayed away from discretionary spending and corporate clients held back on major decisions, preferring to defer big ticket projects until the Brexit deadlock is lifted. | “Worried consumers fearful of rising living costs stayed away from discretionary spending and corporate clients held back on major decisions, preferring to defer big ticket projects until the Brexit deadlock is lifted. |
| Unless the economy rebounds, Brock adds, Britain’s service sector firms could face “a fight for survival”. | Unless the economy rebounds, Brock adds, Britain’s service sector firms could face “a fight for survival”. |
| This chart explains why IHS Markit fears Britain’s economy could soon be shrinking. | This chart explains why IHS Markit fears Britain’s economy could soon be shrinking. |
| Aside from the brief dip seen after the EU referendum, today’s service sector PMI is the joint- weakest seen over the past decade. | Aside from the brief dip seen after the EU referendum, today’s service sector PMI is the joint- weakest seen over the past decade. |
| It equals the previous low point recorded in December 2012. | It equals the previous low point recorded in December 2012. |