Growth in Britain's dominant service sector slowed sharply in February after January's weather-related bounce and companies recorded job losses for the fifth month in a row, a survey showed today.
February's headline services PMI index fell to 52.6 from January's eight-month high of 54.5, a peak that followed a negative reading in December blamed on snow. The index, compiled by Markit/CIPS, had been expected to fall to 53.5.
Although the pace of growth eased in February, it remained close to the average for the second half of 2010 and will reinforce expectations the economy will recover early this year, but only slowly.
Today's weaker than expected survey contrasts with surprisingly strong data for manufacturing and construction earlier this week. A manufacturing PMI survey on Tuesday showed growth held at a record high in February, while figures yesterday showed construction activity grew at its fastest pace in eight months.
Britain's services sector, which accounts for around three-quarters of the UK economy, faces headwinds this year from public spending cuts, tax rises and lower consumer spending.
Today's survey did contain some positive signals, however. Businesses were more upbeat about the future year's prospects than at any time since June and, excluding January's spike, the new business reading for February was the strongest in nine months.
The rate of input price inflation eased slightly from January's near two and a half year high, although it was still above the average for the last two years. Average prices charged rose for a fifth consecutive month as service sector companies sought to rebuild margins to offset higher input price costs and January's VAT sales tax rise.
