Sunday 18 August 2019

Irish service sector slows as UK economy hit by Brexit nosedive

Slowdown: Uncertainty over British PM Theresa May’s Brexit deal has hit UK growth. Photo: Reuters
Slowdown: Uncertainty over British PM Theresa May’s Brexit deal has hit UK growth. Photo: Reuters
Ellie Donnelly

Ellie Donnelly

Activity growth among Irish service providers slowed in December for the third consecutive month, and was the weakest since November 2017, according to the latest Services Business Activity Index (BAI) from IHS Markit.

The BAI, an indicator designed to provide a single -figure measure of the health of the services industry, posted 56.3 in December, down from 57.1 in November. Any reading above 50 shows growth.

The weaker expansion in business activity was fuelled by cost inflation. However, new order growth among service providers quickened in December, as respondents indicated that they had seen greater customer interest in their services.

New export business also expanded at a faster pace in December, as firms saw an overall pick-up of international demand, especially from the UK.

However, UK economic growth slowed to a crawl at the end of 2018 and the housing market is stalling, according to data published yesterday, less than three months before Brexit.

Britain is due to leave the European Union on March 29 but what will actually happen on that day remains far from clear.

Yesterday's data indicated that the disarray is starting to affect the economy.

Lending to UK consumers grew at its slowest pace in nearly four years in November and the number of mortgage approvals fell by far more than expected.

Mortgage lender Nationwide said its house price index had grown in December at the weakest annual pace in nearly six years.

Overall, Britain's economy looks on track for quarterly growth of just 0.1pc in the fourth quarter, data company IHS Markit estimated, based on its monthly purchasing managers' index (PMI) surveys of businesses.

November and December were the weakest two months for morale among services firms, which make up the bulk of the economy, since March 2009 - around the low point of Britain's last recession - the PMI indicated.

In contrast, Irish service sector firms continued to create jobs at a sharp rate.

Expectations of greater customer orders, a recovery in the domestic economy and increased business from abroad were all cited by Irish firms as reasons for optimism.

Irish Independent

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