UK services sector sees sharp slowdown in May

Growth in the services sector saw its biggest slowdown in almost four years in May, a survey suggests, raising fears about the economy's strength.

The closely watched purchasing managers' index (PMI) from Markit/CIPS fell to 56.5 from 59.5 in April - its steepest fall since August 2011.

A figure above 50 still indicates expansion, but Markit chief economist Chris Williamson said the "lacklustre growth picture" was a "concern".

It's the weakest figure in five months.

Mr Williamson said that, when taken with surveys of the manufacturing and construction sectors published earlier this week, the data pointed to the economy growing at a quarterly rate of just 0.4% in May.

He added this "raised doubts about the ability of the economy to rebound convincingly from the weakness seen at the start of the year".

In the first three months of the year, the UK's economy grew by 0.3%, official figures have shown, slowing from the 0.6% growth seen in the final quarter of 2014.

The UK services sector is by far the largest part of the economy, accounting for about three quarters of economic activity.

Markit said anecdotal evidence suggested that the sharp slowdown in May was linked to business uncertainty surrounding the general election.

"Rate hikes later this year should not be ruled out: there are signs that the disappointing rate of expansion is only temporary," Mr Williamson added.

The pound fell sharply against other currencies following the release of the PMI survey. Against the dollar it dropped by nearly a cent to $1.5273.