A new survey has shown that the UK’s service sector has shown growth, although it slowed unexpectedly in comparison to December. This puts it in line with the country’s manufacturing sector.
The data also shows an increase in business confidence, which suggests that growth may begin to accelerate despite the slowdown at the beginning of this year. There are hopes that this year will exceed last year’s six year high of 1.9% growth.
The news comes just a day before the Bank of England announces its February rate decision. The survey, conducted by Markit, also showed an increase in price pressure for service firms, although not so much to cause worry for the central bank.
With Britain’s recovery picking up pace some have wondered about the timing of a rate increase. Policymakers have suggested the bank is in no rush to bring up interest rates because inflation has decreased and wage growth is subdued.
Chris Williamson, the chief economist at Markit, said: “Even with the easing seen in January, the sector is still expanding at a rate that bodes well for another strong GDP reading in the first quarter.”
Despite the slowing, the survey showed the service sector is still a strong contributor of growth. It currently makes up over a 75% of the country’s GDP.
Other industries have also been supporting growth with construction activity growing at a fast rate and the manufacturing sector showing an eased but firm growth in January.