More good news: British service sector at six-year high
PMI shows rise in new work in the sector has grown to a 16-year high, giving crucial boost to UK economy
ACTIVITY in the UK services sector is running at a six-year high, according to the latest report from purchasing managers. The survey of 700 British firms also found that in August new business in the sector rose to its highest since 1997.
The Financial Times reports that the Purchasing Managers Index (PMI), compiled by Markit and the Chartered Institute of Purchasing and Supply, registered 60.5 in August, the highest reading in more than six-and-a-half years. It was also the eighth consecutive month the service sector has seen growth in new business.
The reading is well above 50 - the PMI rating needed for a sector to be considered expanding - and is higher than experts had expected: analysts had predicted the rating would drop from July's reading of 60.2.
The service sector now accounts for 78 per cent of Britain's economy, and the boost helped lift the overall-sector PMI to its highest level since 1998.
Howard Archer, an economist at IHS Global Insight, told the BBC: "Robust service sector activity played a key role in the UK's developing recovery through the first half of the year, and the very strong purchasing managers' survey for August suggests that the services sector is on course to make an even larger contribution to GDP growth in the third quarter."
The positive data are the latest in a run of good news for the British economy. Earlier this week Markit and CIPS revealed that manufacturing's PMI had risen to its highest for two and a half years. On Tuesday, the OECD increased its growth forecast for the UK economy this year from 0.8 per cent to 1.5 per cent.
Despite the large increase in production the survey found that there has only been a small improvement in employment. However, Paul Smith, senior economist at Markit, said if activity and sales continue to grow, "then higher payrolls and, just as important for many workers, increased wages, should hopefully follow." ·