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3 October 2013 | Will Green
The UK services sector has produced its strongest quarterly performance since 1997.
The seasonally-adjusted Markit/CIPS Purchasing Managers’ Index reached 60.3 in September, slightly down on August’s near seven-year high of 60.5, but still showing growth compared to the baseline of 50, which indicates no expansion.
Purchasers reported a marked gain in new business, improved business confidence and greater willingness among clients to commit to new contracts.
A sharp rise in new business, which has been registered for the past nine months, placed strain on company resources during September, as highlighted by a marked increase in backlogs.
A number of service providers have responded by increasing employment, and more than 50 per cent of the survey panel predicted an increase in activity from current levels over the coming year.
However, operating costs continued to rise, with higher fuel and utilities prices continuing to be the primary drivers.
David Noble, group CEO at CIPS said: “After nearly six lost years of economic output, the UK economy looks to have really found its feet. The services sector signed off September to complete its best quarter since 1997. In conjunction with manufacturing and construction, Q3 2013 represents the best ever quarterly performance in 15-years of combined UK PMI history.”
Chris Williamson, chief economist at Markit, said: “Although third quarter growth of 1.2 per cent still leaves the economy 2.2 per cent smaller than its peak before the crisis, growth is clearly running much faster than the government and Bank of England anticipated earlier in the year. If such strong expansion persists, it’s hard to see how the bank can avoid a review of its ‘forward guidance’ policy.”