UK service sector and high street sales cool
August saw growth in the UK service sector and high street sales slow, according to two new surveys, suggesting last month's interest rate rise is starting to bite.
This morning sterling was worth $1.89425, 220.22000 yen and 1.47690, with many assuming the new data will help to hold off the Bank of England from raising interest rates for a second consecutive month.
Figures from the British Retail Consortium (BRC) show sales were up 2.5 per cent compared with last year - although in the wake of the July bombings last year sales were weak.
The three month trend rate for growth fell to 2.7 per cent from 4.1 per cent in July for like-for-like sales, although total sales were down just 0.2 per cent to 5.4 per cent, reflecting growth in retail space.
Kevin Hawkins, BRC director general, said: "Any suggestion that we are seeing a significant and sustainable return to the sort of sales growth we were reporting two or three years ago is simply not supported by the evidence.
"The recent increase in interest rates has yet to work through to consumer spending or the housing market. The outlook for the next few months is therefore very uncertain."
Helen Dickinson, head of retail at KPMG, added that there were doubts whether current growth rates are sustainable.
In the service sector, the Chartered Institute of Purchasing and Supply index fell over one point to 56.7 - showing growth remains, but at the lowest level since March 2003, when the Iraq war commenced.