- Chris Williamson, Markit chief economist
Activity in the UK services sector accelerated more than expected in April amid growth of new business, while job creation increased at a strong pace. The UK services sector, which accounts for around 78% of the whole economy, stayed firmly above the contraction line for the 28th straight month in April as the Markit/CIPS services PMI gauge advanced to 59.5, up from the preceding month's 58.9, and above the market consensus of 58.5. However, Markit reported that prices charged by service firms dropped for the first time in six months and were at their lowest in more than three years, reducing the chances of the Bank of England hiking interest rates this year.
The services PMI followed much weaker-than-expected equivalent surveys from the manufacturing and construction sectors, which showed parts of the UK economy are struggling, and fuelled concerns that the British recovery was faltering. In the first quarter of the year, growth in Britain's overall economy slowed to just 0.3%. Britain's National Institute for Economic and Social Research also said that it expected growth would accelerate again, although the weak first quarter weakened its forecast for British growth in 2015 as a whole. NIESR revised down its growth outlook for 2015 from 2.9% down to 2.5%. This compares with the growth of 2.8% seen in 2014.
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