In what is just one more market indicator that the economy is falling steadily, there are newfound fears that another recession is imminent. Recent data released by the Markit/CIPS Index shows that the services sector is quickly losing ground and although it remains above the 50 mark which separates growth and contraction, it is evident of a marked decrease in growth.
Economists were surprised with the recent data released by Markit/CPS that indicated the services sector in the UK has fallen much further than had been predicted. The current reading is at 51.3 but it is down from 52.9 which it had been in September. The forecast had been for a reading of 52 and it is clear that 51.3 is significantly lower than anyone had projected.
Although the reading is still above the 50 mark, it is evident that the economy is slowing much quicker than any had thought to be the case. It is important to keep in mind that the services sector comprises 76% of the economy in Britain; services being anything from hotels and restaurants to computing. Compounding fears is the fact that figures for the manufacturing sector are down as well.
As if two key sectors of the economy falling were not bad enough, the construction survey is down as well which doesn’t bode well for the coming and final quarter of 2011. All indicators are now pointing to another recession if something doesn’t improve in the final three months of the year. The PMI report for the manufacturing sector indicated that its decline is accelerating.
With growing fears over Greece’s default and the EU being sent into a financial tailspin, these figures are not encouraging. Whether or not the UK will be in a double-dip recession as the new year is ushered in is yet to be seen, but economists are predicting this may very well be the case.
