Service sector fails to grow in 3 months to July

LONDON (Reuters) - The mighty service sector failed to grow for the first time in 6 years in the three months to July as business at pubs, clubs and bars plummeted, official figures showed on Wednesday.

The Office for National Statistics said that service sector output, which makes up more than three-quarters of the economy, was unchanged in the three months to July versus the previous three months.

That was the weakest three-monthly outturn since the thee months to August 2002 when output had been depressed by the nation enjoying extra holiday to celebrate the Queen's jubilee. Excluding that, service sector output has not been weaker since the current statistical series began in 1995.

The biggest downward effect on the figures came from hotels and restaurants, where output fell by 1.5 percent in the three months to July, perhaps as consumers cut back on entertainment in the wake of soaring prices and rising job insecurity.

Within that sector, the largest decrease was in the trade of public houses, bars and clubs which the ONS said probably fell by more than 1.5 percent in the three month period.

Output of the distribution sector fell by 0.2 percent compared with the previous three months as declines in wholesaling and the motor trade were partly offset by an increase in retail.

Service sector output in July alone, however, increased by 0.6 percent on the month. The most significant increase in this was business services and finance, mostly computer software which the ONS said quite volatile.

Separately, the ONS released figures on productivity for the second quarter of 2008 which showed output per worker rose by 0.2 percent on the year. This compared with a rise 0.7 percent on the year in Q1.