UK economic recovery accelerates as services sector soars

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The UK economy is continuing to show further signs of strength with the services sector accelerating at its fastest pace for more than two years. 

According to the latest Markit/CIPS Services Purchasing Managers Index, UK service sector growth reached its highest level since March 2011 during June as incoming new business rose at a rate unmatched for six years.

The headline Business Activity Index recorded 56.9 in June, up from May’s 54.9, the highest reading for 27 months. Growth has now been recorded for six successive survey periods, and has continually improved throughout. The principal driver of increased business activity during June was a rise in sales volumes according to Markit, which now forecasts the UK economy to grow by at least 0.5 per cent in the second quarter of the year.

Chris Williamson, chief economist at Markit says: “New orders and job creation across all sectors are now rising at the fastest rates for almost six years, led by the vast services economy, boding well for robust growth momentum to be sustained as we move into the second half of the year.”

Ian Kernohan, Economist at Royal London Asset Management adds: “The latest PMI surveys suggest that GDP growth in the second quarter will be quite strong. Following on from the very strong BCC survey earlier this week, the UK seems to be the one area where recent economic news is consistently surprising to the upside. This will complicate plans for the new BOE Governor to introduce forward guidance on interest rates next month.”