Demand for financial services drives UK service sector growth
A report from IHS Markit has shown that the UK’s services sector saw an increase in activity in June, with demand for financial services being one of the main drivers of growth.
The financial services firm’s Purchasing Managers’ Index increased to 55.1 last month, up from 54 in May, with activity in the UK’s services sector growing at its fastest rate since October 2017. The increase was higher than expected, with analysts predicting that the index would remain at 54.
With the UK’s services sector accounting for 80% of the British economy, the boost in activity in the sector suggests that the economy recovered in the second quarter of the year, with the report showing a likely growth of 0.4%, up from 0.2% at the start of the year.
The PMI’s respondents reported a general rise in client demand, particularly for business and financial services.
Members of the Bank of England’s Monetary Policy Committee have suggested that the bad weather at the start of the year contributed to the UK’s weaker economic growth.
Better weather and major UK events such as the Royal Wedding and the World Cup have provided a boost for businesses, leading to stronger economic growth.
Commenting on IHS Markit’s Purchasing Managers’ Index, Howard Archer, an economist with the EY Item Club, said: “The improved services survey completes an overall stronger set of purchasing managers' surveys pointing to the economy warming up in June.”