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- Philip Shaw, Investec
Activity in Britain's services sector dropped to its lowest level since March 2009 following the country's decision to leave the European Union, fresh data from HIS/Markit revealed on Wednesday. The final Purchasing Managers' Index (PMI) for the services sector fell to 47.4 on a seasonally adjusted basis in July from 52.3 points seen in the preceding month, in line with market analysts' expectations and the preliminary reading released by Markit/CIPS two weeks ago. Furthermore, the all-sector PMI, which includes the manufacturing sector as well as the construction sector and the services sector declined to 47.3 points in the reported month, following June's 51.9 points and hitting the lowest level since April 2009. Although Chris Williamson, chief economist at Markit, commented in the report it is too early to say if the indicators will remain in the contraction territory in the upcoming months, adding that the fall of the all-sector PMI showed an increased chance of the United Kingdom sliding into recession.
Moreover, the PMI surveys added pressure on the Bank of England to cut interest rates and its economic growth forecasts for the domestic economy at its August meeting on Thursday for the first time since the financial crisis.