Sunny

Sunny

max temp: 23°C

min temp: 15°C

ESTD 1874 Search

UK: Service sector defies the big freeze to return to growth

15:29 05 February 2013

The prospects of the UK economy avoiding a return to recession have improved following industry surveys from the services and retail sectors

The prospects of the UK economy avoiding a return to recession have improved following industry surveys from the services and retail sectors

BRITAIN’S chances of avoiding a triple-dip recession received a boost today as industry figures signalled a return to growth in the powerhouse services sector.

shares

The latest Markit/CIPS purchasing managers’ index (PMI) showed an overall reading of 51.5 in January, the highest since last September and a marked recovery after the first contraction in activity for two years in December.

Activity in the sector, which accounts for 77% of wider UK economic output, was helped by an increase in new business levels and increased capacity as firms took on more staff.

Figures from the British Retail Consortium (BRC) also suggest the high street performed far better than expected, with like-for-like January retail sales growing at the fastest rate since December 2011, up 1.9% on the previous year.

The figures have confounded expectations for a snow-hit start to 2013, with many expecting firms to have suffered amid the adverse weather and freezing conditions.

Experts said the services sector performance raised hopes that the wider economy would return to growth this quarter, which would see the UK avoid plunging into an unprecedented triple dip recession.

Economist Blerina Uruci at Barclays said: “Considering the importance of the services sector for the economy, an improvement here bodes well for first quarter growth, although we would point out that the PMI is still far from being consistent with a solid pace of expansion.”

Official figures earlier this month estimated that gross domestic product shrank by a worse-than-expected 0.3% in the fourth quarter of 2012.

The economy would have to contract again this quarter to be back in recession, but there were fears that the heavy snow at the start of 2013 would cause GDP to shrink again.

Markit said the readings across all of its PMIs pointed to growth so far in the first quarter, with the all-sector index at 51.7 in January against 49.8 in December.

The services report showed that the sector saw its best gain in employment for six months, while business confidence hit an eight-month high.

Last week’s PMI for the manufacturing sector showed a robust reading of 50.8 in January - above the no change in activity value of 50 for the second month in a row.

But the construction sector was hit badly by the weather conditions, with PMI figures yesterday showing an output reading of 48.7 in January - below 50 for the third month in a row.

Vicky Redwood, chief UK economist at Capital Economics, gave the figures a cautious welcome. “While there is tentative hope that a triple dip may be avoided, there are still few signs of an actual recovery in the economy,” she said.

shares

2 comments

  • Talk about grabbing at straws ! Has anybody ever heard of this index before ? If the Retail Price Index isn't good enough, then we (the toriesldems) will create another one !! Talk about creative accounting !

    Report this comment

    freedomf

    Tuesday, February 5, 2013

  • Talk about grabbing at straws ! Has anybody ever heard of this index before ? If the Retail Price Index isn't good enough, then we (the toriesldems) will create another one !! Talk about creative accounting !

    Report this comment

    freedomf

    Tuesday, February 5, 2013

The views expressed in the above comments do not necessarily reflect the views of this site

Dame Fiona Kendrick:, chief executive of Nestlé  UK & Ireland

Food giant Nestlé has announced plans to close its defined benefit pension scheme, sparking the threat of industrial action.

The Treasury has sold another 1% stake in Lloyds Banking Group.

The taxpayers’ stake in Lloyds Banking Group has fallen to below 16% after the Government sold off another tranche of shares.

The installation of solar panels on the roof of Precision Marketing Group's premises in Lamdin Road, Bury St Edmunds

A Suffolk-based firm will be among the organisations taking part in a nation-wide celebration of solar energy tomorrow.

Candy Gaga'’s Wanda Hewell, right, and daughter, Cherish.

Tower Ramparts in Ipswich now has its very own castle – thanks to the success of a local sweet shop business.

Stansted Airport

A report into the future of Britain’s airports does not rule out a second runway at Stansted – and raises fears of extra night flights to the Essex airport.

Growth in manufacturing eased last month  to its slowest level in two years.

Britain’s manufacturing sector grew at its slowest pace in more than two years last month, impacted by subdued demand from Europe.

Speedy Hire
 has warned that its results for this year will come in

Tool rental business Speedy Hire saw nearly a third of its stock market value wiped off after it announced the shock departure of its chief executive and warned over a major blow to full year profits.

Greene King chief executive Rooney Anand.

Pubs and brewing group Greene King today posted another year of record revenues, with sales within its key Retail division topping £1billion for the first time.

Suffolk Coastal considers convenience store bid

Planning chiefs have responded to concerns about noise and antisocial behaviour arising from proposals for a new convenience store in Kesgrave by insisting on closing times being brought forward an hour and the installation of a barrier to restrict overnight parking.

Tim Dunford, managing director and master brewer at the Green Jack Brewery, third from left, with Beer for Summer judges Mark Dorber, left, and Charlie McVeigh of The Draft House, right, and Peter Gordon, on trade director of Budweiser Budvar.

A Suffolk brewing company is celebrating after winning a new national “Beer for Summer” competition.

Most read

Most commented

Topic pages