Services sector shows some growth

 

Britain's double-dip recession was again called into question today as a survey revealed further growth in the powerhouse services sector.

The Markit/CIPS survey came in at 53.3 in April, which although a drop from 55.3 in the previous month, still represents growth for the 16th month in a row.

The economy entered a technical recession in the first three months of the year, according to the Office for National Statistics (ONS), as it shrank 0.2%, following a 0.3% decline in the previous quarter.

But Markit chief economist Chris Williamson said: "From what we are hearing from panellists, this certainly does not sound like an economy in recession."

The sector, which makes up around 75% of the total economy, was boosted by a rise in incoming new business, driven by companies' success at converting inquiries into contracts, Markit said.

In addition, the data showed that optimism among UK service providers hit its highest level in more than two years, with more than 50% of those surveyed expecting a rise in activity in 12 months' time.

The survey follows results from the manufacturing sector, which saw growth slow to its lowest level of the year, fuelling fears that the economy will struggle to return to growth.

Some economists cast doubt over the ONS figures when they were published last week, following a run of strong industry surveys from the manufacturing and services sector.

The Bank of England last week called the ONS estimates on the construction sector "perplexing" and said it put more weight on the positive purchasing managers surveys published throughout the quarter.

However, the figure was only a first estimate, with 40% of the total data used in June's final version so far collected, and subject to revision.

Markit said the underlying performance of the UK service sector remained positive in April, with activity, new business and employment all recording growth.

The survey revealed that competitive pressures and the need to offer discounts to attract more customers bore down on pricing power in the sector last month, consequently squeezing margins.

Staffing levels rose at a pace that matched January's near four-year high, Markit said, spurred on by the encouraging level of new business orders.

Mr Williamson went on: "Even though the weaker services growth follows similar slowdowns in manufacturing and construction, the PMI surveys suggest that the economy will have expanded again in April, and that the recent gloomy official data pointing to a downturn in the first quarter will eventually be revised to show modest growth."

He said a question remains over whether the data are weak enough to encourage the Bank of England to pump more cash into the economy, as inflation remains far above the 2% target.

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'