The Chancellor George Osborne’s chances of avoiding a humiliating triple-dip recession improved yesterday after the UK’s powerhouse services sector enjoyed its fastest growth since last summer.
The March surge was the best since last August when the Olympics gave a much-needed fillip to the economy between July and September last year, according to the latest activity index from the Chartered Institute of Purchasing & Supply (Cips). The survey, where a score over 50 signals growth, improved to 52.4 last month.
Services – encompassing everything from hotels and restaurants to IT and finance – are crucial to the UK’s fortunes as the sector accounts for around three-quarters of output. The compiler Markit’s snapshots of services, construction and manufacturing, closely watched by the Bank of England, are consistent with 0.1 per cent growth in the first three months of 2013. This would avoid a technical triple-dip after a 0.3 per cent decline between October and December.
Markit’s chief economist, Chris Williamson, said: “The Government and Bank of England will breathe sighs of relief in seeing signs of a gathering upturn.”
Scott Corfe, an economist with the Centre for Economics and Business Research, added: “These latest results are encouraging news and suggest that a ‘triple-dip’ recession should just about be avoided.”
The upbeat survey came as the Bank’s rate-setters held off on more help for the economy yesterday as interest rates were left at their record low 0.5 per cent and decided against expanding its money-printing programme beyond £375bn.
Despite poor weather during March, Cips said firms took on more staff and saw the steepest rise in new business since May last year.
Official data also revealed an encouraging start to the year for the services sector, with a 0.3 per cent rise in output during January.
- More about: