Service sector contracts for first time in 5 years

Britain's services sector shrank for the first time in five years raising fresh worries about the UK job market, it has been reported.<br/>

Britain's services sector shrank for the first time in five years raising fresh worries about the UK job market, it has been reported.

A survey by the Chartered Institute of Purchasing and Supply (CIPS) and NTC research, discovered that employment in the service sector fell from 51.0 in April to 46.5, in their employment index, last month.

Roy Aycliffe, director of professional practice at the CIPS, said "Employment levels in the [service] sector contracted sharply in May as waning workloads led to a significant culling of jobs. Not surprisingly, the hotels and restaurants sector reported the strongest decline in staffing levels, reflecting consumers' cutting back on spending."

Recruitment is set to be adversely affected with this year's survey results being the biggest decline ever recorded which could lead to a potential recession.

Michael Hume of Lehman Brothers told the Telegraph: "The continuing divergence of activity and price indices suggests that the service sector has now entered a period of genuine stagflation."

The service sector accounts for three quarters of economic growth, according to the Telegraph.