Thursday, January 06, 2011
Services snowed under too
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

The service sector purchasing managers' index matched its construction counterpart, by dropping sharply in December, in its case from 53 to 49.7. Since index levels below 50 are consistent with falling output, this suggests that service sector activity declined, for the first time since April 2009. Markit, which produces the data, estimates that gross domestic product rose by 0.4% in the fourth quarter of 2010, sharply down on the 0.7% expansion in the third quarter and the 1.1% growth of the second.

Meanwhile, the Bank of England's credit conditions survey pointed to relatively flat credit availability in the latest three months, although with some evidence of improved availability in the first quarter of 2011. One striking feature is the drop in mortgage demand in the latest three months, which lenders expect to persist. The survey is here.