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Services sector shock sparks downturn fear | Services sector shock sparks downturn fear |
(32 minutes later) | |
An influential survey indicating that the service sector has been shrinking has sparked fears the UK could be heading for a downturn. | |
The sector, which accounts for 80% of the UK economy, unexpectedly shrank for the first time in almost three years last month, the survey indicates. | |
The purchasing managers' index from IHS Markit/CIPS fell to 48.9 in March from 51.3 in February, below forecasts. | The purchasing managers' index from IHS Markit/CIPS fell to 48.9 in March from 51.3 in February, below forecasts. |
Any figure below below 50 shows a contraction in the sector. | Any figure below below 50 shows a contraction in the sector. |
It is the first time the index has fallen below 50 since July 2016, which was immediately after the UK voted to leave the European Union. | It is the first time the index has fallen below 50 since July 2016, which was immediately after the UK voted to leave the European Union. |
IHS Markit's chief economist Chris Williamson said its survey indicated the UK economy shrank in March and had stalled over the first quarter as a whole. | IHS Markit's chief economist Chris Williamson said its survey indicated the UK economy shrank in March and had stalled over the first quarter as a whole. |
He said it was now "at risk of sliding into a deepening downturn in coming months". | He said it was now "at risk of sliding into a deepening downturn in coming months". |
"A stalling of the economy in the first quarter will therefore likely turn into a downturn in the second quarter unless demand revives suddenly which, given the recent escalation of Brexit uncertainty, seems highly improbable," he added. | "A stalling of the economy in the first quarter will therefore likely turn into a downturn in the second quarter unless demand revives suddenly which, given the recent escalation of Brexit uncertainty, seems highly improbable," he added. |