Services sector shows an appetite for growth
THE economy is on course to see out 2016 in good shape after Britain’s powerhouse services sector grew at its fastest rate for 10 months in November.
A snapshot of activity across industries including restaurants, computing and transport, which generate over three-quarters of UK output, showed its strongest expansion since January.
Companies also took on staff at the fastest rate since April to help deal with a backlog of work, although optimism over longer-term prospects was dented by political uncertainty and rising costs.
The Markit/CIPS services purchasing managers’ index climbed to 55.2 from 54.5 in October, its fourth monthly reading above the 50 denoting growth following a post-EU referendum contraction.
Economists said the update means the economy is likely to maintain the 0.5 per cent quarter-on-quarter growth achieved over the previous three months.
IHS Markit chief business economist, Chris Williamson, said: “The further upturn in the vast services sector shows that the pace of UK economic growth remains resiliently robust in the fourth quarter.”
Mr Williamson said rising prices linked to a weaker pound are “a big concern”, which would “inevitably” feed through to consumers in the form of higher prices.
He added: “The sustained improvement in the business surveys and sharp rise in prices suggest that the odds will continue to shift away from the Bank of England adding more stimulus.
“However, any policy tightening still seems a long way off given the uncertainty facing the UK economy.”
Prospects were enhanced by today’s British Retail Consortium/KPMG sales monitor showing a 1.3 per cent rise in retail sales in November compared with 0.7 per cent growth a year ago. Like-forlike sales were up 0.6 per cent. Food was the biggest contributor to growth.
BRC chief executive, Helen Dickinson, said: “Overall, consumer spending remains stable, although very much value-driven with a focus towards products on promotion as shoppers take advantage of the deals of the moment and retailers strive to offer the best choice and value to their customers.”