Hopes of a rebound in the UK economy were dashed today after a survey revealed the slowest rate of growth in the key service sector for three months.
The closely watched Markit/CIPS survey, where a reading above 50 indicates growth, dipped to 53.8 in February, down from a 10-month high of 56 in January.
The weaker performance, dragged down by a slower increase in new business orders, follows a lower than expected reading for the manufacturing sector as rising oil prices weighed on the sector.
Both sectors had reported stronger than expected growth in January, renewing optimism over the recovery.
The service sector, which makes up roughly 75% of the total economy, saw a fall in sales growth last month, Markit said, despite evidence of price discounting to support new business wins.
The survey found that output prices recorded their steepest monthly fall since November 2009, which will support the view held by the Bank of England that inflation will continue to fall over the coming months.
There was some cheer, however, as employment in the service sector rose for a third successive month in February and confidence among respondents lifted amid "signs of an improved economic climate".
The Markit/CIPS survey for manufacturing gave a reading of 51.2, down from 52 the previous month and weaker than economists' expectations. UK manufacturers battled the sharpest monthly rise in input prices for more than 19 years and the second sharpest in the survey's history after three months of declines.
