UK service sector sees biggest fall for 15 months
- 29 June 2011
- From the section Business
UK service sector output saw its biggest fall in 15 months in April, but the Office for National Statistics said the figures had been affected by the royal wedding and hot weather.
ONS figures showed that service sector output contracted by 1.2% during April.
But the ONS said April was "unusual" due to the extra public holiday for the royal wedding, and the warmest weather for the month since records began.
The service sector accounts for about three-quarters of the UK economy.
It includes everything from hotels and restaurants to the banking industry and public transport.
April's decline in service sector output followed a 0.8% rise in March.
The breakdown of April's service sector output figures show that the biggest decline from March seen in the ONS's distribution category, which includes the retail sector. This saw a 2.5% fall.
Business services and finance saw the next biggest decline, dropping 1.3%.
Transport, storage and communication fell 0.7%, as did government and other services.
The hotels and restaurants category was the only one to see output rise in April, up 0.9%.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "Given the dominant role of the services sector this is worrying news for second-quarter GDP growth prospects - even allowing for the fact that activity was clearly held back appreciably in April by the extra public holiday resulting from the Royal Wedding."
He added that the service sector appeared to be being held back by consumer spending, and that the danger was that this would continue over the coming months.
Offical data earlier this week confirmed that the UK economy expanded by only 0.5% during the first three months of 2011, while consumer spending between January and March declined by 0.6%.
Consumers are cutting back on their spending in the face of higher energy and food bills.