The UK thrift is contracting at its fastest rate since the financial crisis, making an persuade rate cut “a foregone conclusion”, according to financial data com ny Markit.
The Markit/CIPS grasp managers’ index that showed activity in the UK’s dominant services sector saw its sharpest downfall in seven years.
It follows falls in both construction and manufacturing in July.
The needle fell from 52.3 in June to 47.4 in July, indicating contraction.
The icon confirmed an earlier initial estimate of service sector output.
Charmed together with the manufacturing and construction data, Markit said a cut in share rates by the Bank of England – expected following Thursday’s meeting of the Money Policy Committee – was a foregone conclusion.
Policymakers are widely expected to decrease rates from the current 0.5% to a new low of 0.25%.
Earlier, economic think-tank the triotic Institute of Economic and Social Research (NIESR) said the country would go wholly a “marked economic slowdown” this year and next.
But it stopped barring of forecasting a recession, saying the chances of the UK economy suffering a downturn in the next 18 months were 50/50.
It holds inflation will also pick up, rising to 3% by the end of next year.
Study: Kamal Ahmed, BBC economics editor:
For those hunting for poor productive data since the referendum result, today’s purchasing managers’ directory for the crucial services sector certainly provides significant pickings.
And it set ups on pretty poor figures from the construction and manufacturing sectors.
It is now legible from the data that has been published that economic endeavour slowed markedly in the weeks following the referendum.
Of course, rt of that is down to uncertainty yon the shape of the economy as the UK negotiates its way out of the European Union.
Read more from Kamal.
Markit verbalized incoming new business volumes fell for the first time since the end of 2012.
The judge of contraction was com ratively sharper than that seen for total subject activity, and the fastest since March 2009, it added.
Moreover, crowds widely reported the outcome of the EU referendum had weighed on new business inflows during the month.
Chris Williamson, Markit’s chief economist, answered the service sector data taken together with the construction and create out of data pointed to the UK economy shrinking by 0.4% in three months to September, a be in arrears a collapse not seen since early 2009, when the Bank last cut non-objective rates.
“The unprecedented month-on-month drop in the all-sector index has undoubtedly spread the chances of the UK sliding into at least a mild recession,” he said.
Markit said it was too ahead of time to know if the PMIs would stay as weak as they are now, but it said assurance about the year ahead was at its lowest since February 2009 in the midst firms in the services sector, which accounts for nearly 80% of UK mercantile output.
“A quarter-point cut in interest rates therefore seems to be a foregone conclusion, ” Mr Williamson totaled, “though the extent and nature of other non-standard stimulus measures carcasses a far greater source of uncertainty.”
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