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Markit's and the Chartered Institute of Purchasing & Supply's services purchasing managers' index (PMI) for the U.K. fell to 55.6 in August from 57.4 in July, missing expectations for a rise to 57.6. It was the lowest level since May 2013.
A reading above 50 indicates expansion in the sector.
The decline was partly driven by a slower growth in business since April 2013.
"Even after allowing for usual seasonal influences, August saw an unexpectedly sharp slowing in the pace of economic growth. The services PMI came in well below even the most pessimistic of economists' forecasts1 and follows disappointing news of a stagnation in the manufacturing sector earlier in the week," the Chief Economist at Markit Chris Williamson said.
He added that the U.K. economy is expected to expand 0.5% in the third quarter, after a 0.7% growth in the second quarter.
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