Forexpros – Service sector activity in the U.K. expanded at a faster rate than expected in March, supported by a rise in volumes of incoming new business, data showed on Wednesday.
In a report, market research group Markit said the seasonally adjusted Markit/CIPS Services Purchasing Managers Index rose by 1.5 points to 55.3 in March. Analysts had expected the index to decline by 0.3 point to 53.5 in March.
That was an improvement on February’s 53.8 and, over the first quarter as a whole, the index averaged its highest reading since the second quarter of 2010.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
The latest survey of U.K. service providers indicated stronger growth of both activity and new business in March amid reports of an improved economic climate.
Jobs were also created with an eye on the future – expectations for activity growth remained positive in March, with confidence little changed on February’s 12-month high.
Respondents also noted that higher enquiry levels and being able to squeeze more work from existing contracts had supported March’s rise in activity.
On the price front, cost pressures were sustained in February, albeit to a lesser degree than in previous months. Input price inflation was the lowest in just over a year-and-a-half.
Commenting on the report, Chris Williamson, chief economist at Markit said, “Faster growth of services activity in March indicates that the economy is on the up again, skirting recession as business continues to bounce back from the lull seen late last year”
“The upturn accompanies a similar strengthening in construction activity and ongoing growth of manufacturing, suggesting the economy will have grown by as much as 0.5% in the first quarter.”
Following the release of that data, the pound held on to modest losses against the U.S. dollar, with GBP/USD shedding 0.07% to trade at 1.5902.
Meanwhile, European stock markets were broadly lower. The EURO STOXX 50 retreated 0.7%, France’s CAC 40 dropped 0.8%, London’s FTSE 100 fell 0.65%, while Germany’s DAX tumbled 1.15%.
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