"Strong UK Services PMI data for July follows on from equally positive numbers from sister construction and manufacturing surveys, as the recovery becomes increasingly broad-based and gains further traction heading through the summer"
- Paul Smith, senior economist at survey compilers Markit
The pace of growth of Britain's service sector accelerated to the fastest since 2006, cementing expectations the economy is gathering momentum. Report from the Markit Economics and the Chartered Institute of Purchasing and Supply showed a gauge of activity surged to 60.2 in July up from 56.9 in the preceding month, outpacing analysts' estimates for a reading of 57.4. A confident performance in the nation's key sector, which accounts for around 77% of the overall economic output, rose by 0.6% in the second quarter and contributed most to the 0.6% overall expansion of the GDP in Q2. Figures also showed that the sector was showing a stable growth since the end of 2009, with activity in the industry now approximately at the level previously seen five years ago, as the recent economic slump did not have such a devastating impact on the industry.
Also Monday the U.K. leading expert stressed out that the current policy introduced by the BoE's Governor Mark Carney, which includes a forward guidance, may lead to a surge in consumer prices. Forward guidance is expected to see the central bank pledge to keep borrowing costs at record-low for an extended period of time. This measure could risk inflation running higher current target of 2%, said Prof Michael Woodford of the University of Columbia.
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