UK: Services lift raises rates pressure

Group of people in queue at bank. Growth in the services sector has slowed, according to the CBI. Group of people in queue at bank. Growth in the services sector has slowed, according to the CBI.

Tuesday, August 5, 2014
4:00 PM

Another strong performance by Britain’s powerful services sector has stepped up the pressure on policymakers to consider a rise in interest rates.

To send a link to this page to a friend, you must be logged in.

The Markit/CIPS services purchasing managers’ index (PMI) registered 59.1 last month, up from 57.7 in June and well above the measure of 50 which indicates growth.

Economists said the highest reading for the sector since November indicated that GDP growth will at least reach 0.8% in the third quarter of this year.

It is also expected to increase the chances that the Bank of England’s monetary policy committee (MPC) will decide to raise interest rates before the end of the year.

Policymakers are meeting this week amid speculation that their discussions may produce a split vote for the first time since July 2011.

Markit chief economist Chris Williamson said: “The sustained strength of growth will add to calls for interest rates to start rising later this year.

“However, with prices charged for services rising only very modestly again in July, an absence of inflationary pressures means there is still a strong case for any tightening of policy to be delayed until 2015.”

Today’s report follows a strong construction sector reading, although manufacturing figures last week were disappointing as firms struggled with the strong pound and weaker demand in key export markets.

The services report found that more staff were recruited to help firms keep on top of current workloads and in anticipation of further growth in the coming months.

Taken across all three CIPS surveys, the rate of job creation eased from June’s all-time high but remained consistent, with approximately 100,000 jobs being created by the private sector in July.

Mr Williamson said this meant that the unemployment rate should fall below 6% by the end of the year, compared with 6.5% in the three months to May.

The services sector, which covers everything from social work to banking, accounts for about three-quarters of the country’s economic activity.

Backlogs of work in the sector rose at a marked and accelerated pace during July, with the degree of growth the strongest since January.

0 comments

Comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other East Anglian Daily Times visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by East Anglian Daily Times staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Forgotten your password?

Not a member yet?

Register to create your own unique East Anglian Daily Times account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

ADVERTISEMENT

ADVERTISEMENT

loading...

ADVERTISEMENT

ADVERTISEMENT