U.K. Services Industry Stagnates in April as Retail Sales Plunge

June 29 (Bloomberg) -- Britain’s services companies stagnated in April as retail sales plunged, underlining the weakness of the economy at the start of the second quarter.

Services, which account for 77 percent of gross domestic product, were unchanged following a 0.6 percent gain in March, the Office for National Statistics said in London today. They grew 2 percent from a year earlier, when activity was subdued by the royal wedding.

The figures add to weak manufacturing and construction data for April, suggesting the economy has gained little momentum since the first quarter, when output shrank 0.3 percent. The Bank of England is edging closer to resuming bond purchases as threats from the euro-area debt crisis mount and the economy struggles to shake off a recession.

In the three months through April, services were unchanged following a 0.2 percent gain in the first quarter, the statistics office said.

Distribution, hotels and restaurants posted a 0.8 percent monthly decline in April as retail sales fell 2.4 percent and sales and repairs of motor vehicles dropped 2.1 percent. This offset a 0.4 percent gain in transport, storage and distribution. Business services and finance as well as government services posted gains of 0.1 percent.

In a separate release today, the statistics office said output per worker fell 0.7 percent in the first quarter. It was unchanged on the year.

Unit wage costs, or the amount spent on wages and salaries to produce each unit of output, rose 0.4 percent on the quarter and gained 2.1 percent on the year.

To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.net; Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Craig Stirling at cstirling1@bloomberg.net