According to the latest statistics, growth in the UK’s services sector slowed during May to 56.5 on the Purchasing Managers Index (PMI), falling three points from April’s figure of 59.5.
Following the news, sterling fell against the euro and the dollar, though only by one cent against the latter and it recovered quickly.
The news has given analysts cause for concern, and the widespread expectation is that the UK’s second quarter growth rate will not be as high as earlier predicted.
Slowdown in the services sector is the worst it has been for almost four years, which is having a negative impact on Britain’s economic recovery because it is responsible for over three quarters of national output.
The sector has also been the main force behind the UK’s economic recovery in recent years.
The OECD, an international think tank funded mostly by the wealthy countries it counts among its members, recently issued a warning that the global economy is not performing as well as it should be.
However, it said that UK growth has continued at a “healthy pace”, especially when wage and employment increases are taken into account.
Last month, the Bank of England cut its GDP growth forecasts for the UK this year to 2.5 per cent from 2.9 per cent, and for 2016 it has cut the figure to 2.6 per cent from 2.9 per cent.
Concerns regarding weak global demand and the Government’s planned spending cuts are among the reasons behind the revised figures.