UK services dish up a boost for economy

BRITAIN’S economy has picked up pace after a summer slowdown – but the recovery is heavily reliant on the services sector, a report showed yesterday.

Markit said its all-sector index of activity in the UK, where 50 is the cut-off between growth and decline, held firm at 55.7 in November.

This puts the economy on course for growth of 0.6pc in the final quarter of the year – up from 0.5pc seen in the third quarter.

Chris Williamson, chief economist at Markit, said: ‘The UK continues to enjoy the “Goldilocks” scenario of solid economic growth and low inflation.’ But the report fuelled fears of a two-speed recovery, with services companies booming while manufacturers and builders struggle.

The index for the services sector, which includes hotels, restaurants, legal firms and computing, rose to a four-month high of 55.9 in November. But manufacturers have been in recession all year and saw their score fall to 52.7 last month, while the construction index slipped to 55.3.

The Bank of England looks set to leave interest rates at 0.5pc once again next week, with observers expecting the first hike since 2007 to come next year or in 2017.

Markit said wages in the services sector are picking up. Mr Williamson said: ‘The upturn in earnings growth raises question marks over just how long inflation, and therefore interest rates, will remain low for.’