Tuesday 21 November 2017

UK service sector growth beats forecasts

The data pushed the value of the pound up and soothed fears over the health of the UK economy after data on manufacturing and construction this week came in lower than expected. Photo: PA
The data pushed the value of the pound up and soothed fears over the health of the UK economy after data on manufacturing and construction this week came in lower than expected. Photo: PA
Colm Kelpie

Colm Kelpie

Growth in the UK's services sector beat expectations last month, but companies raised prices at the sharpest level since 2008 in a sign that rising inflation could begin to squeeze.

Activity, employment and new orders in the Irish sector also rose, according to the latest Purchasing Managers Index (PMI) for the sector

The services sector, which accounts for three quarters of the UK economy, saw business activity increase to a three-month high and new work rise at a strong pace.

The data pushed the value of the pound up and soothed fears over the health of the UK economy after data on manufacturing and construction this week came in lower than expected.

But there were warning signs pointing to the impact of Brexit referendum-induced fall in the value of sterling. Services companies raised their selling prices at the fastest pace since 2008, and hired staff at the slowest pace in seven months.

Duncan Brock, director of customer relationships at the UK's Chartered Institute of Procurement & Supply, said the data will provide some comfort to economy watchers.

Meanwhile, rates of expansion in the Irish services sector eased last month, but activity, new orders and employment continued to rise sharply.

The seasonally-adjusted business activity index dipped to 59.1 in March from 60.6 in February. More than half of those who responded predicted a rise in activity over the year.

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