UK economy battered by 'Beast from the East' storm
Bad weather took a toll on the UK economy in March, with growth in services slowing to its weakest in almost two years.
The heavy snow, along with a drag from subdued consumer demand and "heightened economic uncertainty", means overall growth probably slowed in the first quarter, IHS Markit said yesterday.
Based on its industry surveys, it estimates expansion of 0.3pc, down from 0.4pc at the end of 2017.
Markit's services Purchasing Managers Index dropped to 51.7 from 54.5 in February. That's far weaker than economists had forecast and the lowest since July 2016, just after the Brexit vote.
Measures of employment and new business also declined.
The pound fell, weakening 0.2pc to $1.4050 as of mid-morning London time.
Britain's building industry also felt the effects of the unusually bad weather in March, with construction shrinking for the first time in six months.
The PMI for manufacturing, published earlier this week, was little changed at 55.1.
Because the drop in PMI was weather-related, it's unlikely to change the underlying view of officials at Bank of England, who downgraded their own estimate for the first quarter after the so-called 'Beast from the East' snowstorm.
According to Markit, that means the widely expected interest-rate increase in May is still on the cards.
Within services, while business optimism remained solid in March, it has weakened since the start of the year, and is now at its lowest since June 2017. IHS Markit said Brexit uncertainty has played a part. (Bloomberg)