Services sector surge reduces stimulus chances

 

The UK economy’s powerhouse services sector moved firmly on to the front foot in April, stacking the odds against a return to the printing presses by the Bank of England’s rate-setters next week.

Services firms – accounting for more than three-quarters of the economy, from IT to accountancy and hotels to restaurants – enjoyed their best growth since the Olympics last month, according to the  Chartered Institute of Purchasing & Supply. Its closely watched activity index, where a score over 50 indicates growth, improved to 52.9 in April from March’s 52.4.

The buoyant survey marked a hat-trick of good news after similar positive signs from builders and manufacturers during April. The UK avoided a triple-dip recession in the first quarter of 2013.

Chris Williamson, chief economist at the survey compilers Markit, said: “A broad-based improvement is becoming evident in the UK economy, greatly reducing the likelihood of the Bank of England seeing any need to increase its asset purchases in the immediate future.”

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