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| UK service sector sees strong expansion in December | UK service sector sees strong expansion in December |
| (about 1 hour later) | |
| The UK service sector grew at its fastest pace for 17 months in December, a closely watched survey has indicated. | |
| 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. |
| Services, which include areas such as retailing and banking, make up more than three-quarters of the UK economy. | |
| 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' | 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. | 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. | 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". | 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." |
| Price pressures | |
| At the same time, a survey by the British Chambers of Commerce indicated that there had been "continued expansion" for both manufacturing and services in the final three months of the year, but "at a lower level for the services sector than before the EU referendum". | |
| The BCC said: "Firms in both sectors, particularly in manufacturing, are facing pressure to raise prices, principally as a result of the cost of raw materials and other overheads." | |
| Dr Adam Marshall, the BCC's director general, added: "Overall, our findings suggest growth will continue in 2017, albeit at a more modest pace. | |
| "The government must act strongly this year to support investment and improve the business environment - both of which are crucial to boosting business confidence, and therefore further growth." |