Services send mood soaring
ECONOMIC recovery is gathering momentum after Britain’s dominant services sector grew at its fastest pace for seven months in March.
The Markit/ CIPS purchasing managers’ index for services spanning transport, business services, IT and hotels and restaurants – which makes up more than three- quarters of output – climbed to 58.9 last month from 56.7 in February. A fi gure above 50 means expansion.
It has buoyed optimism following last week’s updates from manufacturing and construction that GDP grew by 0.7 per cent in the first three months compared with 0.6 per cent over the previous quarter.
Official first- quarter GDP fi gures are due out just before the General Election.
The data helped sterling strengthen by about 0.5 per cent against the European single currency to just under € 1.37.
Markit chief economist Chris Williamson said: “The UK economy moved up a gear in March, recording the strongest pace of growth since August.
“Faster growth of new business and improved expectations of prospects for the year ahead also bode well for the upturn to retain strong momentum.
“The combination of fuller employment and falling prices should support economic growth by providing an important catalyst to higher consumer spending, on which the upturn appears to have become increasingly dependent in recent months.”
Williamson said the data supports the view that the next move in interest rates will be upward. But economists do not expect the Bank of England’s monetary policy committee under governor Mark Carney to raise rates this year unless wages growth takes off.
The survey found that business expectations among services are at their strongest since May 2014, despite uncertainty surrounding the outcome of the Election, buoyed by foreign investment, new products, export demand and construction.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “This is a very pleasing survey through and through which indicates that the dominant services sector is continuing to drive healthy UK economic growth.
“Furthermore, the more forwardlooking elements of the survey show the services sector poised for further robust growth in the second quarter.”