UK service sector activity hits 13-month high in March

| April 5, 2011 | 0 Comments

Growth in the UK’s closely-watched service sector surged ahead in March, figures have revealed today.

The Chartered Institute of Purchasing and Supply (CIPS)/Markit purchasing managers’ index (PMI) rose to a 13-month high of 57.1 last month - from February’s reading of 52.6.

Analysts had expected the index to remain broadly unchanged.

The reading means the index remains above the crucial 50 level, which separates growth from contraction.

The survey covers businesses making up around 40% of the economy, but does not include retailers or the public sector.

In the meantime, the new business index edged higher to 55.6 from 53.4 - a 12-month high, while the amount of outstanding business increased for the first time since September 2007.

The figures suggest the UK economy will experience growth in the first quarter of 2011, following the shock contraction in the previous quarter.

However, despite the positive data, senior economist at Markit, Paul Smith explains: “Service providers remain very cautious about expanding headcounts in the face of numerous economic headwinds.”

The figures come shortly after the CIPS/Markit PMI index revealed UK construction activity eased slightly in March.

The PMI edged lower to 56.4 in March, from February’s 8-month high of 56.5 – albeit better than forecasts of 54.8.

Construction accounts for around 6% of Britain’s economic output.

Meanwhile, it was also recently revealed UK manufacturing activity slowed more than expected in March.

The closely-watched CIPS/Markit manufacturing PMI dropped to 57.1 in March – a five-month low – down from a revised 60.9 in February.

The reading was much lower than the 60.5 expected by analysts.

The manufacturing sector accounts for around 13% of economic output.

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