Coronavirus slams brakes on UK services sector

Growth in the UK’s vital services sector slowed in February as the spread of coronavirus weighed especially heavily on businesses with overseas customers.

The sector scored 53.2 over the month, down from 53.9 in January, in the influential IHS Markit/CIPS UK services purchasing managers’ index (PMI) report.

Anything above 50 is growth, while a score below 50 means it is shrinking.

IHS Markit chief business economist Chris Williamson said: “The post-election rebound in service sector growth lost some of its bounce in February, in part due to coronavirus-related disruptions to sectors such as travel and tourism, but continued to expand at an encouragingly robust pace.”

The impact of Covid-19 was mainly seen in booking cancellations and delayed projects, especially involving clients in Asia.

More than 90,000 cases have been reported, including some 3,100 deaths, around the world since the virus first emerged in China at the end of December.

But the UK services sector was still growing in February, seeing an increase in business activity and incoming new work since the general election in December.

And business confidence was at its highest level since March 2015, in part because the election removed some political uncertainty.

However, Mr Williamson warned that the optimistic outlook could be short-lived.

“Whether this expansion can be sustained in coming months is starting to look increasingly at risk,” he said.

“On one hand, February saw future output expectations climbing to the highest for over four-and-a-half years … On the other hand, the survey also highlights the risks to the economy from the coronavirus.”

The outbreak has driven down tourism and hit travel and transport businesses, but also reduced confidence in the overall market, he added.