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3 July 2014 | Gurjit Degun
June saw new business volumes in the UK services sector rise at the fastest pace in six months.
The Markit/CIPS UK Services Purchasing Managers’ Index (PMI) recorded 57.7 last month, against the 50 baseline. This was down from May’s 58.6 and a three-month low but still signalled a sharp increase in activity.
Almost 28 per cent of the survey panel recorded growth, with increased workloads the primary factor driving activity higher during June.
Last month’s PMI also marked the eighteenth month running that a rise in new work has been signalled. However, this placed additional pressure on capacity levels. Volumes of work outstanding held by UK service providers increased at the strongest rate for four months.
The survey reported a record increase in employment, but panellists said that higher backlogs reflected staff shortages. More than 27 per cent of the survey panel recorded an increase in staff numbers.
Chris Williamson, chief economist at Markit, said: “A renewed upturn in growth of new orders across all three sectors suggests that the economy should also pick up speed again as we move into the second half of the year.
“The persistent strength of the PMI surveys raises the likelihood of policymakers deciding that a pre-emptive rise in interest rates later this year is warranted, especially given the speed at which the labour market is improving.”
David Noble, Group CEO, CIPS, added: “With optimism increasing and momentum continuing to build, there is no evidence to suggest that the speed in the recovery is about to slow down.”