Investing.com - Although the U.K. service sector activity continued its expansion in February, its larger-than-expected decline took it to levels not seen in nearly three years, industry data showed on Wednesday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index declined to 52.7 last month from a reading of 55.6 in January that was its highest reading since last November. Analysts had expected the index to dip to only 55.1 in February.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
Business activity and new work both expanded at the slowest rates since March 2013.
Employment growth hit a two-and-a-half year low.
The report further showed that inflationary pressures remain weak.
“The slowdown in February leaves the PMI surveys suggesting that economic growth could weaken to 0.3% in the first quarter, but there are downside risks to even this modest expansion,” Markit chief economist Chris Williamson warned.
Williamson further pointed out that the extent of the slowdown should be a shock to policy makers. “(It) surely puts to bed any talk of the Bank of England raising interest rates,” he added.
GBP/USD was trading at 1.4062 from around 1.4061 ahead of the release of the data, while EUR/GBP was at 0.7730 from 0.7732 earlier.
Meanwhile, European stock markets remained broadly lower, although London’s FTSE 100 managed small gains of 0.04%, after trading completely flat right before the release. The EURO STOXX 50 dipped 0.20%, France's CAC 40 lost 0.25%, while Germany's DAX slipped 0.09%.