LONDON, Aug 5 (Reuters) - Britain's services sector shrank for a third straight month in July but the pace of contraction slowed unexpectedly even as new business declined at the fastest rate in the survey's 12-year history.
The Chartered Institute of Purchasing and Supply/Markit's headline activity index for the sector rose to 47.4 last month from a seven-year low of 47.1 in June.
That was the third consecutive reading below the 50 mark which divides expansion from contraction but above the consensus forecast of 46.7.
The figures are unlikely to alter expectations the Bank of England will hold interest rates at 5 percent on Thursday. The central bank is concerned that inflation is running at nearly twice the 2 percent target and is seen going higher yet.
The July survey did, however, show input cost inflation easing off its record peak.
Business confidence fell to its lowest level since the survey began, outstanding business contracted for a 10th straight month and employers made hefty cuts to their workforce.
'While services activity fell at a slower rate during July, the risks to future trends in the sector remained clearly skewed to the downside,' said Paul Smith, senior economist at Markit Economics which compiles the survey.
'The record contraction in new business, severe cost pressures and deteriorating sentiment all point to the continuation of difficult times ahead.'
Source: http://uk.biz.yahoo.com/05082008/323/uk-service-sector-shrinks-third-month-july.html
