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Services sector slows in April

The UK services sector slowed unexpectedly in April with the Markit/CIPS services PMI activity index showing a fall from 56.5 in March to 55.3 in April. There appear to have been two main elements which caused the surprise fall, with analysts expecting a rise to 57.0, which were the transport mayhem caused by the volcanic ash cloud and concern about the UK election. The figure is the lowest since January 2010 and while still above the crucial 50.0 level, which indicates growth in the sector, there are concerns about the short to medium term outlook.

There is no doubt that the UK services sector is crucial to the UK economy and will lead the UK out of recession in due course. However, the slight fall in the index shows the fragile nature of the ongoing recovery and with the European debt debacle still ongoing, there are concerns about the short term. If the sector is struggling at the moment, when the UK is supposed to be moving into positive ground, what are the prospects if the European debt crisis transfers itself to the UK?

While the general signs from the UK economy are positive it would not take an awful lot to knock the UK recovery off track.

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