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UK services sector hobbled by politics - PMI

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By Reuters
UK services sector hobbled by politics - PMI
FILE PHOTO: People walk through the Canary Wharf financial district of London, Britain, December 7, 2018. REUTERS/Simon Dawson   -   Copyright  Simon Dawson(Reuters)
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LONDON (Reuters) – Britain’s services sector shrank in November to mark three months without growth for the main driver of the economy, a survey showed on Wednesday as uncertainty over Brexit and an imminent national election weighed.

The IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) fell in November to 49.3 from October’s 50.0.

The reading was revised higher from a preliminary 48.6, but the index has still not exceeded the 50 threshold for growth since August – the longest such run since 2009.

“Service providers have attributed the recent soft patch to delayed decision-making on new projects until greater clarity emerges in relation to the domestic political landscape,” IHS Markit economist Tim Moore said.

The survey added to a string of underwhelming business activity data in the run-up to the Dec. 12 vote. However, the state of the economy has only played a minor role in an election campaign dominated by Britain future relationship with the European Union and promises of increased spending on public services.

The figures suggested the world’s fifth-biggest economy is contracting at a quarterly rate of 0.1%, financial data company IHS Markit said, a smaller decline than the 0.2% suggested by November’s flash estimate.

The PMIs have overstated economic weakness recently, in part because of higher government spending ahead of Brexit that has not been captured in private-sector measures of demand.

“November’s PMI surveys collectively suggest that the UK economy is staggering through the final quarter of 2019, with service sector output falling back into decline after a brief period of stabilisation,” Moore said.

New orders contracted at the fastest pace since July 2016, the month after Britons narrowly voted in favour of Brexit in a referendum, the PMI showed.

The composite PMI, which combines the services and manufacturing output indexes, fell to 49.3 from 50.0, matching September’s 38-month low, but down less than its flash estimate of 48.5.

(Reporting by Andy Bruce; editing by John Stonestreet)