Services sector is struggling to stay afloat - ITEM Club
Nida Ali, economic advisor to the EY ITEM Club, comments on today's PMI services figures:
- Today's results suggest that the services sector is struggling to stay afloat
- The reduction in output charges is a real cause for concern
- Growth prospects have weakened considerably and today's data, coupled with the manufacturing PMI, point to nearly no growth in Q4
“Today’s services PMI figures are extremely disappointing. The services sector seems to be achieving low levels of growth in Q4, with the slowdown in new work implying that companies are finding it harder to win business. The sector is struggling to stay afloat.
“A closer look at the release reveals some unsavoury trends. The reduction in output charges means that companies were forced to lower prices in response to muted demand. This is a cause for concern and could be the start of a worrying trend.
“Combined with the dismal figures for manufacturing earlier this week, it seems likely that there will be barely any growth in Q4. The economic outlook has deteriorated sharply in recent months and, with the Eurozone crisis showing no signs of abating, already weak growth prospects are dominated by downside risks.”