"It is too early to identify the demand drivers of the upswing. But the output data alone are enough to suggest this strength will spill over into the third quarter"
- Allan Monks, an economist at JPMorgan Chase & Co.
Britain's services growth accelerated at its fastest pace in more than two years last month, fuelling expectations of a strong growth in the second quarter, Markit Economics and the Chartered Institute of Purchasing and Supply said Wednesday. A measure of activity in the sector jumped to 56.9 up from 54.9 in May, beating analysts' expectations of a 54.5 reading. The index was following an uptrend movement since February, suggesting the stabilization of the sector and pointing at further improvement. Another sign the upswing may be sustained, the number of new orders within the service sector posted the biggest monthly gain since June 2007, while a survey of private sector activity pointed to a solid economic expansion in Q2.
The number of opening of new businesses at the sector climbed at the strongest pace in six years, boosting backlogs and hiring to the highest level since August 2007. Moreover, sentiment stood at the highest in 14 months. Earlier this week data showed that Britain's manufacturing sector expanded at the fastest pace in almost two years, while construction activity improved for a second consecutive month in June, cementing expectations that the recovery is gaining momentum. All these figures are diminishing signs that the BoE may expand its asset-purchase programme or cut its benchmark interest rate during its first policy meeting under Mark Carney leadership.
© Dukascopy Bank SA