British services sector surpasses expected growth levels
New purchasing managers’ index data shows that the British services sector surpassed expectations in July 2014.
Lots of attention has been paid to growth in the British manufacturing sector recently, perhaps because it was hit so hard during the financial crisis. But Britain has long been an economy rooted heavily in the service industries, and new data shows that this side of the economy is performing strongly too.
The latest purchasing managers’ index (PMI) figures from Markit and the Chartered Institute of Purchasing and Supply (CIPS) show that activity in the service sector expanded at the fastest rate since November 2013. Indeed, the headline Business Activity Index stood at 59.1 in July 2014 – well above the 57.7 recorded in June 2014. Anything about 50.0 indicates growth.
Not only does this mean that the service sector has thoroughly exceeded expectations, but it also means it has been continually growing for more than a year and a half.
New services, more marketing activity and fresh opportunities to bid for new business all contributed to the promising figures, the report authors say, while activity rose on the back of an influx of new business. In fact, new business growth continued at a rate that was little changed from June, when it reached the fastest pace of the year so far.
To manage the additional work, hiring is also on the rise – although payroll growth eased slightly in July, it was still not far from the survey peak that was reached in the previous month. With business having risen for 16 consecutive months, it seems there will continue to be plenty of opportunities to develop and launch careers in the services sector.
Chris Williamson, chief economist at Markit, says that the data suggests UK economic growth is unlikely to be derailed. Indeed, he says that in the third quarter gross domestic product is predicted to rise by 0.8 per cent year-on-year.
“The only dampener is a softening in the overwhelming confidence we have become used to, perhaps a sign of realism sneaking in, as firms keep a close eye on costs and refuse to get carried away,” added David Noble, group chief executive at CIPS.