UK Services Sector Surges in July

Britain’s dominant services sector enjoyed a stronger than expected July, raising expectations that one or more policymakers at the Bank of England will vote for a rise in interest rates at Thursday’s meeting.

Activity in the sector – which includes restaurants, hotels, transport and business services and accounts for more than three-quarters of the economy – rose at the fastest pace in eight months according to the Markit/CIPS services PMI.

The headline index rose to 59.1 from 57.7 in June, where anything above 50 indicates expansion. Economists were expecting a more modest increase to 57.9.

The figure offsets weakening growth indicated in the equivalent surveys for the manufacturing and construction sectors, suggesting the third quarter got off to a reasonable start in July following growth of 0.8% in both the first and second quarters.

Chris Williamson, chief economist at Markit, said: “The survey data point to the growing likelihood of yet another strong economic expansion in the third quarter. We would expect to see GDP rise by 0.8% again if the surveys hold their current levels.”

Economists said the better-than-expected PMI increased the prospects that one or members of the Bank’s nine-strong monetary policy committee will vote for a rate rise when it meets for its monthly policy decision on Wednesday and Thursday. It would be the first time a member voted for a rise since rates were cut to an all-time low of 0.5% in March 2009.

via The Guardian

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