Business

UK services growth remains strong

  • 4 December 2013
  • From the section Business
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Markit expects economic growth to have picked up in the fourth quarter

Growth in the UK services sector remained strong last month, a survey has suggested.

The Markit/CIPS Purchasing Managers' Index (PMI) for the service sector recorded a level of 60 for November.

Although this was down from October's 16-year high of 62.5, it still marks buoyant growth in the sector. A reading above 50 indicates expansion.

Markit said recent surveys suggest the UK economy may grow by more than 1% in the fourth quarter of the year.

This would represent an acceleration from the 0.8% growth recorded in the third quarter.

The strong PMI services reading comes on the back of similarly upbeat surveys of the manufacturing and construction sectors, and is another piece of positive news for the Chancellor, George Osborne, who will deliver his Autumn Statement on Thursday.

Mr Osborne is expected to announce improved official growth forecasts in the statement.

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Chris Williamson, Markit's chief economist, said: "Further buoyant growth of the services economy hands the chancellor a further piece of good news ahead of the Autumn Statement.

"When looked at alongside the upturns in the buoyant manufacturing and construction sectors, the three PMI surveys indicate that the pace of economic growth will have accelerated in the fourth quarter, rising to above 1.0%.

"Job creation is also surging as companies report increasingly buoyant demand. Rising employment will help sustain the upturn through improved consumer confidence and spending."

Markit's survey also indicated that inflationary pressures were beginning to build. Input cost inflation hit a nine-month high and output charges also rose.

David Tinsley, UK economist at BNP Paribas, said: "The UK services PMI dropped back in November, but the fact that it remained at 60 suggests that the service sector is still growing at a rapid pace.

"The signs from the PMI surveys this week are that strong activity is feeding through into higher domestic prices, but it is debatable this is at a pace to raise anxieties."

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