Markit’s purchasing managers’ index (PMI) for the service sector climbed from 51.8 in February to 52.4 in March, putting clear blue water between it and the 50 level which indicates no change in overall business conditions.
This indicates that the biggest chunk of the UK economy was growing healthily during the first quarter of the year, which analysts said put paid to worries the overall economy would shrink, which would have caused a so-called triple-dip.
Such a dip would do serious harm to chancellor George Osborne’s reputation for economic competence, lengthening what is already the economy’s slowest ever recovery from a contraction.
“These latest results are encouraging news and suggest that a triple-dip recession should just about be avoided,” said Scott Corfe at the Centre for Economics and Business Research. “We expect quarter-on-quarter growth of 0.1 per cent.”
Markit chief economist Chris Williamson said the government and Bank of England (BoE) “will breathe a sigh of relief” after the encouraging numbers. “Business activity grew in March at the fastest rate since the Olympics-related upturn in August, providing a much needed boost the economy. The service sector looks set to have helped the UK avoid a triple-dip recession by the narrowest of margins.”
The economy shrank 0.3 per cent in the final three months of 2012, capping off a zig-zag year during which GDP expanded overall, but by just 0.3 per cent.
And in its efforts to safeguard even this mild growth the BoE has allowed inflation to stay above target for 39 successive months.