The UK’s services sector expanded in April at the fastest rate so far this year, according to the Markit/CIPS services purchasing managers’ index (PMI).
PMI rose from 57.6 in March to 58.7 in April – an index of 50 marks the line between expansion and contraction of the market.
Chris WIlliamson, chief economist at Markit, said:
“The UK economic recovery shows no signs of running out of steam, and growth could even accelerate further in the second quarter.
“The upturn in service sector growth matches a similar acceleration to a near-record high for manufacturing output, while construction activity also continues to surge higher.”
The survey also revealed that the private sector is currently creating jobs at a record pace, with 100,000 jobs being created each month.
Economists are now saying that these record levels of growth mean an interest rate rise is now needed.
Alan Clarke, head of fixed income at Scotiabank, told The Telegraph:
“If you can’t hike with double digit house price inflation, a near-60 PMI reading and strong labour data, when can you? As long as this translates into the concrete hard data, it should contribute to a rate hike sooner rather than later.”
Mr Williamson said that the PMI readings and the rise in employment would be a strong factor in the Bank of England’s decisions on raising interest rates.
Image by Alex Eylar