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UK service sector sees strong expansion in December | UK service sector sees strong expansion in December |
(35 minutes later) | |
Activity in the UK service sector grew at its fastest pace for 17 months in December, according to a closely watched survey of purchasing managers. | Activity in the UK service sector grew at its fastest pace for 17 months in December, according to a closely watched survey of purchasing managers. |
The Markit/CIPS services purchasing managers' index (PMI) rose to 56.2 last month, from 55.2 in November - the highest level since July 2015. | The Markit/CIPS services purchasing managers' index (PMI) rose to 56.2 last month, from 55.2 in November - the highest level since July 2015. |
But inflationary pressure in the sector continued, with prices charged rising at the strongest rate since April 2011. | But inflationary pressure in the sector continued, with prices charged rising at the strongest rate since April 2011. |
Markit's Chris Williamson said it defied fears of a Brexit slowdown. | Markit's Chris Williamson said it defied fears of a Brexit slowdown. |
"At face value, this improvement suggests that the next move by the Bank of England is more likely to be a rate hike than a cut," he added. | "At face value, this improvement suggests that the next move by the Bank of England is more likely to be a rate hike than a cut," he added. |
However, Mr Williamson, Markit's chief economist, said policymakers were "clearly concerned about the extent to which Brexit-related uncertainty could slow growth this year". | However, Mr Williamson, Markit's chief economist, said policymakers were "clearly concerned about the extent to which Brexit-related uncertainty could slow growth this year". |
As a result, he said, the Bank's Monetary Policy Committee would have to consider "the current resilience of the economy" alongside "elevated levels of uncertainty", meaning that interest rates could go either way. | As a result, he said, the Bank's Monetary Policy Committee would have to consider "the current resilience of the economy" alongside "elevated levels of uncertainty", meaning that interest rates could go either way. |
Economy 'resilient' | |
Earlier in the week, surveys in the construction and manufacturing sectors indicated a similar pattern of growth. Mr Williamson said that collectively, the surveys pointed to GDP growth of 0.5% in the fourth quarter of the year. | |
The "all-sector" PMI rose to 56.4 in December from 55.1 the previous month - itself the highest reading since July 2015. A figure above 50 indicates expansion. | |
Paul Sirani, chief market analyst at Xtrade, said the latest survey showed the service sector was going "from strength to strength". | |
"Strong services data provides a good indication that the UK economy remains resilient amid ongoing Brexit uncertainty. However, greater tests lie ahead," he added. | "Strong services data provides a good indication that the UK economy remains resilient amid ongoing Brexit uncertainty. However, greater tests lie ahead," he added. |
"Further changes in the wider political landscape in early 2017 are likely to ask more questions of the robust UK economy, with its response anyone's guess." | "Further changes in the wider political landscape in early 2017 are likely to ask more questions of the robust UK economy, with its response anyone's guess." |