Service sector in boost

City A.M. Reporter
The services sector unexpectedly picked up pace in September, though firms' expectations for the next 12 months are bleak, a survey of purchasing managers showed.

The Markit/CIPS services purchasing managers' index rose to 52.9 in September from 51.1 in August, bouncing back from its biggest one-month fall in a decade and moving away from the 50 line that separates growth from contraction.

The figure follows hot on the heels of a PMI survey that showed a return to growth by the manufacturing sector, and eases some of the pressure on the Bank of England to launch a second round of quantitative easing on Thursday.

Markit said it estimated that British economic growth had picked up to 0.4 per cent in the third quarter from the second quarter's dismal 0.2 per cent, based on surveys of the manufacturing, services and construction sectors.

"The rise in the index in September ... may persuade the Bank of England to hold off before implementing any further stimulus at its October meeting," said Markit economist Chris Williamson. "But the case it not clear-cut, as forward-looking indicators from the PMI survey suggest that we may see further softness in the final quarter of the year."

The services PMI showed that firms' expectations for the next 12 months are their most depressed in two-and-a-half years, with this component sinking to 63.5 from 65.1.