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Service sector surveys indicate sluggish growth, says Markit

The UK economy looks to be on course for "steady but sluggish" growth in the third quarter, surveys indicate.

While manufacturing exporters have gained from the fall in the pound since last year's Brexit vote, Thursday's survey indicated consumer-facing businesses are being hit by a reduction in demand due to stretched household budgets.

The service sector in the UK, which accounts for about 80% of the economy, had subdued output growth as the amount of new work failed to match levels seen earlier in the year, IHS Markit said.

However, the lacklustre performance did not stop employers from taking on more staff, with job creation seeing its strongest growth for a year-and-a-half.

Justin Zatouroff, head of business services at KPMG UK, said: "Despite input price inflation and difficulties in finding staff with the right skills affecting the wider performance of the UK economy, the services sector continues to employ more people and see continued growth in revenue.

"However, the ongoing political and economic uncertainty continues to erode confidence in the future performance of the sector."