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UK Services Firms Record Lowest Profitability in Four Years for Q1

Average profitability of businesses in Britain services sector declined to its lowest in more than four years in first quarter of 2018 as retailers found struggling to deliver their services, according a data released by UK’s Office for National Statistics (ONS) on Wednesday (22).

Britain has witnessed a series of store closures and financial meltdowns this year, including well-known high-streets chains such as department store House of Fraser and electronic retailer, Maplin.


The ‘net rate of return’ for services business declined to 17.2 per cent in the first three months of 2018 from 18.4 per cent recorded in the forth quarter touching its lowest since 2013.

An abnormal rash winter pulled down British economic growth to slowdown rapidly in the first three months of this year. ONS has highlighted that the first quarter witnessed a huge number of profit warnings from retailers as well as biggest quarterly fall in retail sales in a year.

Factories have performed a bit better. According to ONS, the net rate of return for the manufacturing sector fell to 15.0 per cent in the first quarter from 15.9 per cent recorded in the last quarter of 2017. However, this figure is marked as the third best reading since 1997.

Meanwhile, the net rate of return for all private non-financial businesses increased for the first time in 1.2 years, to 12.6 per cent from 12.5 per cent in the fourth quarter, supported oil and gas sector.

Profitability of oil and gas exploration and extraction businesses improved their performance for a third quarter running supported by growing global demand and an upward movement in the crude oil prices.

The British economy slightly moved up during April-June period. However, households remained under pressure as the payments were barely kept pace with inflation which has been triggered by pounds decline after Brexit vote in 2016.

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