UK services sector activity surges as PMI jumps in March

 
Emma Haslett
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The sector's success may push up GDP, Markit suggested (Source: Getty)

Activity in the UK's services sector surged in March, new data suggests: Markit's purchasing managers' index (PMI) rose to 58.9 in March, its highest in seven months.

Not only was the figure a sharp rise on the previous month's reading of 56.7, it was also way above the 57 analysts were expecting. Any figure above 50 denotes growth.

The report also showed businesses in the sector are more optimistic about their long-term outlook. It added uncertainty about the outcome of the general election had caused jitters - although Howard Archer, chief European and UK economist at IHS, pointed out the effects are likely to be minimal.

With incoming new business rising to a six-month high in March, outstanding business rising and business expectations at a 10-month high despite uncertainty over the looming general election, prospects look bright for the services sector in the near term at least.

Markit said the figure suggested UK GDP growth of 0.7 per cent in the first quarter of 2015, up from 0.6 per cent mooted by the Office for National Statistics in the fourth quarter of last year - which itself was revised up from 0.5 per cent.

The pound rallied on the news, rising to 1.3708 against the euro, before falling back slightly. The FTSE 100 started the day more than one per cent higher, opening at 6,914 and rising to 6,916 by mid-morning.

David Noble, chief executive of the Chartered Institute of Procurement and Supply, said:

The heightened positivity for the future resulted in new marketing campaigns, and new products as competition increased. This, combined with the rise in activity in the construction and manufacturing sector, all points toward an overall healthier UK economy.

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