GROWTH in the UK's dominant services sector slowed unexpectedly in February, a survey has shown.
The disappointing survey, published by the Chartered Institute of Procurement and Supply (CIPS), played a part in pushing sterling down against the dollar.
The pound was, at 5pm, trading around $1.5265, down by more than 1.25 cents on its level at close of play in London on Tuesday.
CIPS's business activity index for services fell from 57.2 in January to 56.7 in February on a seasonally-adjusted basis. While remaining above the level of 50 deemed to separate expansion from contraction, the latest index reading signalled a slowing of the pace of growth of this key sector.
Economists had forecast the business activity index for services would come in at 57.5.
UK economic growth has slowed sharply in recent quarters.
However, economists appeared to take the disappointing business activity index reading in the latest UK services survey in their stride, pointing to a continuation of strong growth in new business and employment in the sector.
The survey showed a marginal acceleration in the pace of growth of new business and employment for services companies, from already significant rates.
Vicky Redwood, chief UK economist at consultancy Capital Economics, said: "The slight deterioration in the headline activity balance of February's CIPS/Markit
report on services was a bit of a disappointment, but hardly a disaster. The general
tone of the survey was actually quite positive."
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The headline index showed services expansion easing back a little in February but it was still at a historically high level, while increased new business growth, higher employment and improved business expectations bode well for future services activity.
"At this stage, we expect UK GDP (gross domestic product) growth to pick up to 0.7 per cent quarter-on-quarter in the first quarter of 2015 after moderating to 0.5 per cent quarter-on-quarter in the fourth quarter of 2014 from 0.7 per cent in the third quarter and a peak of 0.8 per cent in the second quarter."
CIPS's employment index for the UK services sector edged up from 57.1 in January to 57.3 in February.
The February index reading signalled the second-fastest monthly growth in services sector employment since comparable records began in July 1996.
Chris Williamson, chief economist at CIPS survey compiler Markit, noted that surveys published earlier this week had shown a pick-up in growth rates in the UK manufacturing and construction sectors between January and February.
Mr Williamson said: "Although the rate of expansion slowed in the vast services economy, growth has picked up in both manufacturing and construction. The three PMI (purchasing managers' index) surveys collectively indicated a slight acceleration in economic growth for a second successive month in February as a result, consistent with GDP growth picking up to 0.6 per cent in the first quarter."
CIPS chief executive David Noble said: "Sharper growth in new business has been driven by an upward swing of activity in both the domestic and international markets."
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