- Chris Williamson, chief economist at Markit
Business activity in Britain's services sector slowed sharply in October amid mounting economic uncertainty in the UK. Markit/CIPS services PMI dropped to the lowest level in 17 months of 56.2, down from 58.7 a month earlier. Even though the reading remains above the 50-mark threshold, it follows a streak of weaker-than-expected economic indicators. A mix of concerns over the Euro zone's growth prospects, the threat of a sharp slowdown in China, uncertainty about Fed's monetary policy, along with geopolitical tensions, all curtailed the service sector's recovery last month. The nation's economy is now expected to expand at a 0.5% pace in the final quarter of the year compared with 0.7% in the preceding three-month period. Last month the Bank of England said it forecasted a 0.8% growth in the fourth quarter. On an annual basis the British economy is seen growing 3% in 2014, before slowing down to 2.5% next year and 2% in 2016, according to the NIESR's new outlook report. The think tank also stressed that weak inflationary pressures have alleviated the need to tighten monetary policy. Currently, the institute expects the BoE to raise interest rates in June 2015.
Markit's composite PMI, a broader indicator of the economic health, which includes services, manufacturing and construction sectors, dropped to 56.4 down from 58.1, hitting the lowest level since June 2013.
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