Mark Carney's first week at the Bank of England got even better yesterday as the UK's dominant services firms put in a "stellar" performance with their strongest growth for more than two years in June.
The new Governor has been greeted by a raft of upbeat news from manufacturers and builders but services, which accounts for more than three quarters of growth overall, had its best month since March 2011, according to the Chartered Institute of Purchasing & Supply.
Better weather and new products drove the biggest rise in new business since June 2007 and firms are also taking on staff at the fastest rate for nearly six years. Cips chief executive David Noble said: "The UK services sector finished off Q2 with a stellar performance in June, giving the clearest signal yet that the worst days of the financial crisis are behind us."
Mr Carney is chairing his first meeting of the Bank's monetary policy committee, although no changes to policy are expected. BNP Paribas economist David Tinsley said: "In advance of the August inflation report view on the use of intermediate thresholds and forward guidance there is enough solid data to keep the committee on hold."
Inflation is still above the Bank of England's 2 per cent target at 2.7 per cent. Simon Wells, the chief UK economist at HSBC, added: "While we remain concerned about weakness in underlying demand, it is worth noting that the last time the services PMI was at current levels three MPC members were voting for a rate rise."
The Bank's latest credit conditions survey predicted "significant demand" for mortgage loans driven by Funding for Lending and the Government's Help to Buy scheme would continue for the next three months.
Larger firms are expected to increase demand for loans as credit costs fall although pricing is set to be "broadly unchanged" for small businesses.
Jens Larsen, the chief economist at RBC Capital Markets, said: "The data may well be interpreted as an argument for more targeted intervention to support lending to the SMEs.
"That, of course, is exactly what the recent modifications to the Funding for Lending scheme is meant to do, but further initiatives here seem likely."
Mark of progress
Forget QE, interest rates and the stability of the banking system. The PR-aware new Bank of England Governor, Mark Carney, spent his first day in office discussing the lack of women on British banknotes. By the end of July, when Elizabeth Fry is replaced by Sir Winston Churchill on the fiver, there will be no females (barring the Queen).
After a complaint about this from the Conservative MP Mary Macleod, Mr Carney wrote to her saying he had begun discussions on the issue on Monday. It was "not the Bank's intention" to have no female characters and he would make an announcement on it later this month, he said. Jane Austen is a frontrunner for the role.
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