Growth in UK services sector boosts economy hopes
The Chartered Institute of Purchasing & Supply’s Purchasing Managers’ Index has posted a reading of 56.9 on services activity in October, up from 55.3 in September.
The reading of 56.9 was the highest since August 2007 and beat analysts expectations of 55.5.
Furthermore, October’s reading represented the sixth consecutive month the sector has shown an increase above the crucial 50 mark – which represents growth.
The figures have provided hope that the economy will emerge from recession by the end of the year.
The sector, which makes up for more than two thirds of the economy, consists of services such as restaurants, cinemas, sports venues and leisure centres.
Last month, the Office for National Statistics (ONS) revealed that the UK economy shrank by 0.4% in the July to September period, meaning the country is still in recession.
The fall in GDP means it is the first time the UK has endured six consecutive quarters without growth – the first time since the ONS began gathering the data in 1955.
Howard Archer, chief European and UK economist at IHS Global Insight, said the figures “appear to significantly advance the case for believing that the UK economy really will finally return to growth in the fourth quarter.”
In other news this week, it was revealed that the Chartered Institute of Purchasing & Supply (CIPS)/Markit purchasing managers index of manufacturing activity grew to 53.7 in October, up from the revised reading of 49.9 the previous month.
The reading beat forecasts of a rise to 50.0 and represented the fastest pace of growth in two years.
Furthermore, new orders rose at their fastest in almost six years with the index surging by 6.8 points on the month to 59.5 – the highest reading since January 2004, when it was 61.5.
According to the CIPS, the figures indicate that the economy has made a strong start to the final quarter of this year and according to David Noble of the Institute, manufacturing appears to have “turned a corner”.