UK services survey points to renewed fall in GDP – Capital Economics
FXstreet.com (Barcelona) - Vicky Redwod, Chief UK Economist at Capital Economics notes that the further deterioration in the UK CIPS/Markit report on services suggests that the recovery in the biggest part of the economy has completely fizzled out.
The fall in the headline business activity index from 50.6 to 50.2 in November (consensus 51) took it to its lowest level since December 2010 and in fact left it consistent on past form with a marginal contraction in services sector output.
Redwood notes that although the manufacturing survey released earlier this week improved, a weighted average of the manufacturing, construction and services surveys continues to point to a renewed contraction in GDP in the fourth quarter.
She writes, "Indeed, we still expect a 0.4% drop, reflecting the combination of weak underlying output and the reversal of the Olympics boost. The outlook for growth next year is clearly looking shaky and the OBR will be revising down its economic forecasts fairly significantly alongside the Autumn Statement this afternoon."
The fall in the headline business activity index from 50.6 to 50.2 in November (consensus 51) took it to its lowest level since December 2010 and in fact left it consistent on past form with a marginal contraction in services sector output.
Redwood notes that although the manufacturing survey released earlier this week improved, a weighted average of the manufacturing, construction and services surveys continues to point to a renewed contraction in GDP in the fourth quarter.
She writes, "Indeed, we still expect a 0.4% drop, reflecting the combination of weak underlying output and the reversal of the Olympics boost. The outlook for growth next year is clearly looking shaky and the OBR will be revising down its economic forecasts fairly significantly alongside the Autumn Statement this afternoon."
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