The services sector grew at its slowest pace in 16 months in August, as businesses scaled back activity amid concerns the UK could be in for a period of sluggish growth, if not another recession.

The financial information group Markit and the Chartered Institute of Purchasing and Supply's services purchasing managers' index fell to 51.3 in August, down from 53.1 in July and the lowest level since Britain was still in the depths of the downturn in April 2009. The reduction was largely due to employers cutting jobs in antipation of tough times.

The service sector accounts for about three quarters of Britain's economic activity.

The fall in service sector growth comes after similar declines in manufacturing and construction growth. Indices for all sectors remain above 50, which indicates growth.

Markit says the surveys suggest that economic growth slowed to 0.5% in the third quarter, down from 1.2% the previous quarter.

'While a double dip recession remains unlikely, the survey suggests that the risk has increased and that growth looks set to be slow and choppy going forward,' said Markit chief economist Chris Williamson

Howard Archer, chief UK and European economist at the analyst group IHS Global Insight described the services report as 'worrying' and pointed in particular to worrying employment data.

'Job losses in the sector were the largest since October 2009,' he said.

'This heightens concern over employment prospects going forward, given that jobs in the public sector will be increasingly pared.'

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