UK Service Sector Growth Boosts Recovery Hopes

04 April 2012 15:00 - Victoria Wedderburn

    



UK Service Sector Growth Boosts Recovery Hopes

The Markit/CIPS services PMI, an indicator into the health of the industry, rose to 55.3 in March from 53.8 the month before. The 50 mark separates contraction from expansion. Economists had expected the sector to slow in March, from February as they predicted a fall to 53.4. Employment in the service sector rose at its fastest rate in four years. Businesses also reported an increase in volumes of new business.  The services sector accounts for around 75% of the UK’s economy. Chief executive of the Chartered Institute of Purchasing and Supply, David Noble, said the PMI results suggested that “fears of a double dip recession were unfounded.”

The release of today’s data can be added to other positive results which saw the UK’s manufacturing and construction sectors perform at better than forecasted rates. According to Chris Williamson, chief economist at Markit, the British economy may have grown as much as 0.5% in the first quarter of this year and the services sector expanded by around 0.7%. However, Mr Williamson did say that the string of positive results is not suggestive of a “run-away recovery. Job creation and inflows of new business continue to run well below rates generally seen in the years prior to the financial crisis.” Mr Williamson also added that, “the surveys also suggest that the Bank of England will hold off on further asset purchases unless the economic situation deteriorates in coming months.”

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Related Links :
Purchasing Managers’ Index - Markit/CIPS UK Services PMI
Markit Economics - Press Releases
Bank of England - Central Bank of the UK
Related News - UK Construction Sector Expands
Related News - UK Manufacturing Growth

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