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Friday, 3 September 2010

Is the Economy's services engine spluttering?

Markit reports today that the PMI (purchasing managers index) for the services sector fell, the Markit/CIPS latest services index fell to 51.3 in August from 53.1 in July, still above the 50 mark that divides expansion from contraction. But the lowest level for some months.

Businesses from banks, to accountancy firms and hairdressers are interviewed to build this survey.

If the downward trend continues we will see contraction in the economy. Services account for nearly 2/3rds of the economy so the next survey will surely be watched carefully by Hawks.

KSA people talk to scores of businesses across the UK everyday and our view is that debtor days are rising, banks are (generally) not lending and cashflow is tight for many small to medium sized companies; if sales fall too this could be a perfect storm for many SME's

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