UK services sector outpaces its rivals

Click to follow
The Independent Online

Britain's economy emerged as a safe haven in a troubled global economy yesterday, as US productivity plunged to an eight-year trough while service sectors in the US and Europe tumbled to all-time lows.

Britain's economy emerged as a safe haven in a troubled global economy yesterday, as US productivity plunged to an eight-year trough while service sectors in the US and Europe tumbled to all-time lows.

In stark contrast, a spate of UK economic data looked strong enough that interest rates will probably be kept on hold today at 5.25 per cent. Britain's services sector mounted a recovery, house prices rose strongly last month and strong construction figures prompted predictions that economic growth forecasts will be raised.

Halifax, the mortgage bank, said house prices rose 1.5 per cent on the month and 7.3 per cent on the year, its highest rate for eight months.

The Chartered Institute for Purchasing and Supply said the services sector enjoyed stronger growth in May than April. The Confederation of British Industry reported a modest rise in retail sales.

The Government said the construction industry grew by 1.9 per cent in the first quarter, compared with an estimate of minus 0.5 per cent from the latest GDP data. Michael Hume, an economist at Lehman Brothers, said: "This reinforces our view that rates have troughed."

In the US, however, productivity for the first quarter was revised down sharply from minus 0.1 to minus 1.2 per cent ­ the lowest for eight years. New orders placed at factories declined in April, while a key survey of the non-manufacturing sector contracted to its lowest level since it began in 1997.

In the eurozone, services contracted at a record pace, and economic sentiment fell for a fifth straight month.

Comments