UK service sector activity falls in December, adds to recession fears
LONDON—The U.K.’s biggest industry, the service sector, was hit hard by squeezed consumer spending and wet weather at the end of last year, adding to concerns that the economy shrank in the fourth quarter and will struggle to regain momentum in early 2013.
Official U.K. trade data released on Wednesday showed exports of services fell in November for the fourth straight month, to the lowest level in more than two years. And a European Commission survey on Tuesday showed confidence within the services sector nose-dived in December, to a reading of -23.0 from 0.0 in November—the steepest month-to-month drop since the data were first compiled in 1997. The dire mood backs up findings from a survey last week by data provider Markit, which showed the sector suffered its first drop in activity in two years in December.
Evidence suggests the services sector’s weakness in the fourth quarter was concentrated among consumer-facing firms, in large part due to wet weather in December that kept shoppers and tourists at home. The results from surveys of consumer spending in December have also been lackluster, reflecting a squeeze in incomes still suffered by many households as their pay lags inflation.