The service sector purchasing managers’ index completed a trio of better than expected surveys, and suggested the economy had some momentum going into the second quarter after the 0.3% first quarter rise in gross domestic product (which was also better than expected).
The service sector PMI rose to an eight-month high of 52.9 in April, from 52.4 in March. According to Markit, which complies the data: “The steady improvement in UK service sector performance seen since the start of the year was maintained in April. Growth of business activity was solid and the sharpest for eight months, supported by the strongest rise in new work since last May. A modest increase in staffing levels was also recorded as capacity showed signs of coming under pressure.”
The services PMI supports the message of the first quarter, which was that it is the sector driving the recovery. Both the construction and manufacturing PMIs also rose but remained below the 50 expansion-contraction divide. But the strength of services probably rules out an extension of quantitative easing when the Bank of England’s monetary policy committee meets next week.
This is Markit’s summary of the three PMIs: “The upturn is being led by the service sector, but it has been accompanied by signs of activity stabilising in manufacturing and construction in April. The weighted PMI from the three surveys rose from 51.0 in March to 52.1, its highest since last August and signalling an increase in business activity for the fourth month running. The data suggest that the return to growth enjoyed by the economy in the first quarter persisted and may have gained momentum at the start of the second quarter.” The release is here.
This piece is cross-posted from David Smith’s Economics UK with permission.