The services industry rounded off Markit’s purchasing managers’ indexes (PMI) yesterday, with another month of bumper growth. The headline figure reached 60.3, soaring above the neutral mark of 50, and only slightly below August’s seven-year high.
The UK’s construction companies, manufacturers and services firms recorded the best quarter on record, with the highest figures since the survey began in 1998.
Taken at face value, the surveys suggest that the economy surged between July and September, and is set for growth of around 1.2 or 1.3 per cent. Capital Economics’ Vicky Redwood said: “This might be a bit of a tall order. Nonetheless, GDP growth should have at least beaten the second quarter’s 0.7 per cent rise.”
Firms are finally reporting that recent growth is translating into new jobs, with the highest employment index for just over six years recorded. The indicator of recruitment picked up speed in all sectors.
However, Jeremy Cook of World First noted a caveat: “Banks and business-to-business services are benefiting from the housing market and corporate activity improvements respectively, however, consumer-facing companies are not progressing at the same rate.”
Halifax yesterday confirmed the trend, announcing that house prices climbed rapidly in the three months to September, up 6.2 per cent on the same period in 2012. According to the bank, the ratio of prices to earnings is at its highest since mid-2007, and is on an upward trajectory.
Christian Schulz, senior economist at Berenberg commented: “Unfortunately, households’ real wages are still not rising and they cannot reduce their savings rate forever, so the current heady pace of the recovery may not be sustained.”