- Tim Moore, Markit
Activity growth in the UK economy's engine, the services sector, slowed, questioning the economy's ability to recover from a soft start to the year. The services PMI declined to 56.5 in May, compared with 59.5 in the preceding month. In the first three months of the year, the UK's economy grew by 0.3%, official figures showed, slowing from the 0.6% growth seen in the final quarter of 2014. The UK services sector is by far the largest part of the economy, accounting for about three quarters of economic activity. The Sterling fell by a cent versus the US Dollar, to $1.5262, after Markit's latest report on the sector. At the same time, the annual UK house price index rose at the slowest level in the last 21 months, resuming the gradual downward trend that has started since the summer of 2014. House prices rose 0.3% in May compared to the previous month, bringing down the annual growth rate to 4.6% compared to 5.2% in April, Nationwide, one of the largest building societies and mortgage providers in the UK, reported. The average price of a house in the UK stood at 195,166 pounds in May, up from 193,048 pounds a year ago. Meanwhile, the OECD said Britain's recovery would slow this year, as falling unemployment and strong domestic demand fails to offset a slowdown in investment. While the think-tank expects that the UK economy will grow at a "solid" pace of 2.4% this year, this was down from its forecast of 2.6% in February. Growth in 2016 is expected to be 2.3%, compared with an earlier prediction of 2.5%.
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