UK service sector shows fastest growth in two years

Hopes of an end to the recession have been heightened by September data from the Chartered Institute of Purchasing and Supply.

New figures indicate that the UK service sector has grown at its fastest pace in almost two years, with the Institute’s Purchasing Managers’ Index (PMI) turning in a better than expected performance and increasing to 55.3, up from 54.1 in August.

The index is based on five indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.

Broadly speaking, a PMI below 50 indicates that industry is contracting and over the third quarter of 2009, the index managed an average of 54.2.

The news comes alongside positive data from the Confederation of British Industry, which has reported signs of growth in the UK financial services sector, for the first time in two years.

The body’s latest quarterly report reveals that 32% of firms questioned saw business volumes rise in the three months to early September, while 24% reported a fall.

However, also in the news today is the group chief executive of HSBC who has told The Financial Times that he is delaying expansion plans for fear of a “W” rather than a “V” shaped recession.

Michael Geoghegan is braced for a second economic downturn and therefore cautious about “growing too fast” before signs of a recovery can be confirmed.

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