Services sector slows in wet April

The sector, which accounts for some 75% of the economy, failed to grow between March and April, the Office for National Statistics (ONS) said.

The part of the sector that includes retail, hotels and restaurants was down 0.8% month-on-month after being hit by the wettest April on record, but this was offset by a 0.4% rise in transport, storage and communication.

The survey showed year-on-year growth of 2% across the whole services sector, but the comparison was distorted after disruption from last year’s royal wedding.

Retail output was down 2.4% month-on-month, reflecting previous dire industry surveys that suggested the rain had kept shoppers at home.

Philip Shaw, an economist at Investec, said: “The services numbers, while not disastrous, don’t inspire a huge amount of hope that the economy will bounce back in the second quarter.

“The indicators for the month had been pretty weak across the board as April was effectively rained off, with poor retail sales.”

March had seen a 0.6% rise in the services sector, following a 0.5% fall in February, leaving output flat over the past three months.

Figures released this week showed the UK’s economy contracted by a
bigger than expected 0.4% in the final quarter of 2011 while the 0.3% decline the following quarter was left unchanged.

It is widely expected that June will be disrupted by the Diamond Jubilee celebrations, further dampening the chances of a return to growth in the second quarter of 2012.