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UK services sector growth eases in November

Business activity growth in the U.K. services sector eased in November from a six-month high in October, Purchasing Managers' Index data released by IHS Markit/Chartered Institute of Procurement & Supply showed.

The seasonally adjusted services business activity index fell to 53.8 in November from 55.6 in October but remained above the 50.0 no-change value for the 16th successive month. The November reading indicated a solid increase in business activity which businesses attributed to an upturn in new work. However, the rate of growth was slightly lower than seen on average so far this year.

Service companies took note of rising business and consumer spending during the month but stretched budgets and uncertainty linked to Brexit had continued to act as a brake on growth, IHS Markit said

Backlogs of work rose for the third time in the past four months. Difficulties in hiring and a lack of suitably skilled staff were linked to rising volumes of unfinished work.

Companies also had to contend with a sharp and accelerated rise in average cost burdens.

"Slower service sector growth comes as a disappointment after the improved performances of both manufacturing and construction in November. However, despite the weaker service sector expansion, the latest survey data indicate that the economy is on course to enjoy robust growth in the fourth quarter. The survey data are so far consistent with the economy growing at a quarterly rate of 0.45% in the closing months of 2017," said IHS Markit Chief Business Economist Chris Williamson.

"Uncertainty about the economic outlook, linked commonly to Brexit worries, continued to permeate the business mood in November. However, for now, the survey data indicate that a sufficient degree of optimism in pockets of the economy, notably financial services, tourism, manufacturing and house building, is helping the economy as a whole to sustain steady growth."