February 03, 2010 |
|LONDON (MarketWatch) -- Growth in Britain's services sector slowed more than expected in January as heavy snow took its toll, the Chartered Institute of Purchasing and Supply and Markit Economics said Wednesday.|
The CIPS/Markit services purchasing managers' index fell to 54.5 in January from 56.8 in December, marking the slowest rise in activity in five months. A reading of more than 50 means a majority of managers saw a rise in activity, while a reading of less than 50 signals a contraction.
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Economists had expected a more modest decline to 56.1.
The services sector makes up around 76% of the British economy.
The British pound trimmed a gain versus the U.S. dollar but remained up 0.3% on the day at $1.6019.
Respondents attributed the slowdown in large part to poor weather in January, which also contributed to a fall in the reading for new business. Hotels and restaurants were particularly hard hit.
"The heavy snow appears to have hit services harder than manufacturing in January," said Paul Smith, senior economist at Markit Economics. "Whereas manufacturers were often able to make up for lost production days, service providers -- especially consumer-facing firms -- simply saw fewer customers."
The January purchasing managers' index for Britain's manufacturing sector earlier this week rose to a 15-year high of 56.7, with respondents tying the boost in part to the ongoing weakness of the British pound, which aided exports. See earlier story on U.K. manufacturing PMI.
Manufacturing makes up around 12% of the U.K. economy.
By William L. Watts, MarketWatch