The UK’S growth outlook has been boosted by a strong survey of service sector firms.
The purchasing managers’ index (PMI) published yesterday by Markit fell to a score 56.7 for February from January’s 57.2. Despite the drop, the figure is consistent with strong growth in the sector. A score above 50 signifies growth, with higher scores indicating faster growth.
The service sector makes up 79 per cent of economic activity in the UK.
“At 56.7, the survey continues to point to strong, probably above-trend growth. That reading is above the pre-crisis average, pointing to a rapid pace of expansion,” said Robert Wood, UK economist at Berenberg Bank. PMI surveys for the manufacturing and construction sector published earlier this week also pointed to an acceleration in growth.
“Cheaper petrol prices, cheaper money, tumbling unemployment, continued optimism among firms and a recovering main trading partner all point to UK growth accelerating through the first half of this year,” Wood said.
Wood predicts the economy will grow by 0.8 per cent in the first three months of 2015 and 3.1 per cent for 2015 as whole. It would mark an improvement from the final three months of 2014 when growth slipped to 0.5 per cent and growth for the year was 2.6 per cent. The EY Item Club of economic forecasters also predicts a rebound in growth to 0.8 per cent in the three months to March.