UK services boom: Sector grows at fastest rate since 2006
The UK's service sector is booming, as shown by Markit's purchasing manager's index (PMI). In July the index rose from 56.9 to a whopping 60.2.
For context, we've not seen a PMI number that breaks 60 in a long time across the Eurozone or the US. Economists had forecast a rise to 57.2.
There are other good numbers in Markit's report to celebrate. Business confidence has hit a 15 month high.
Jeremy Cook, chief economist at the currency firm, World First, said:
The good news just keeps on coming for the UK economy and, yet again, we have had all three PMIs for the month (manufacturing, construction and services) come in at multi-year highs.
Although the improvement in the weather has helped things, I do worry about sales being dragged forward from months in the future. There could be a potential ‘deflating of the balloon’ as we move through the rest of the year, and when consumers begin to save cash for the inevitable Christmas splurge.
Paul Smith, senior economist at survey compilers Markit:
Strong UK Services PMI data for July follows on from equally positive numbers from sister construction and manufacturing surveys, as the recovery becomes increasingly broad-based and gains further traction heading through the summer. Indeed, a composite reading of the respective output balances from all three PMI surveys reached a series record high during July, driven by the sharpest increase in new business since March 2004.
David Noble, CEO at the Chartered Institute of Purchasing & Supply:
The services sector stormed to a six year high in July, registering levels of performance not seen since before the financial crisis. Combined with the manufacturing and construction figures, this is the clearest sign yet that the UK economy is experiencing a broad based economic recovery and has the momentum to deliver continued growth.