Survey Finds The Business Service Sector Growing At The Fastest Pace Since 1997

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19th November 2013 13:33 - Business Support

Britain’s services sector enjoyed its strongest growth since 1997 as new business flowed in at record pace last month, according to the latest survey which suggests that the recovery is strengthening. The closely watched Markit/CIPS UK services PMI beat City forecasts to jump to an activity reading of 62.5 in October, up from 60.6 in September, despite the forecast predicting a slight slowdown to 59.8.

The index for new work was the highest since records began in 1996 and companies took on new staff at the fastest pace since 1997, according to the survey of a range of businesses in Britain’s dominant service sector.

The report follows recent news that the smaller construction and manufacturing sectors – in sister PMI surveys – is likely to raise expectations that the UK economy can keep up its recent pace of growth.

Chris Williamson, chief economist at survey compilers Markit, said:

"The UK economic recovery moved up a gear again in October, with the PMIs indicating record growth of output and employment… Historical comparisons of the PMI against gross domestic product suggest the latest survey data are consistent with a 1.3% quarterly rate of GDP growth, up sharply from previous quarters.”

James Knightley, economist at ING Financial Markets, said the survey casts doubt over the Bank's outlook for unemployment. Policymakers have said that they will not raise interest rates from their record low at least until the jobless rate falls to 7%, barring various knock-out clauses being triggered.

He continued to say:

"Taking all of the PMIs together, the composite reading is suggesting that fourth quarter GDP growth could rise as much as 1.5% - equivalent to around 6% annualised growth… It is difficult to believe that any other major economy will come close to that in the fourth quarter so sterling is likely to remain strong, particularly against the euro.”

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