"There are encouraging signs that the strong pace of expansion will persist. September saw one of the largest inflows of new business ever seen by the services survey and business confidence about the year ahead picked up again."
- Chris Williamson, chief economist at Markit
A key pillar of Britain's economy, services sector, which accounts for 78% of the total economic output, posted solid growth last month, bouncing off to its strongest quarter in more than 16 years on the back of a strong recovery in the housing market. On Thursday Markit Economics said a measure of activity stood at 60.3 in September after reaching a seven-year high of 60.5 a month earlier. Analysts, however, expected the same reading as it was registered in August. Even despite a slight disappointment the index hovers above 60 for a third consecutive month, 10 points higher than the threshold level. Other sectors of the economy also expanded last month, further enforcing the notion that the economy has turned a corner and is on the way of its full recovery. The strong figures from services, manufacturing and construction sectors are supporting a case the economy will expand as much as 1.2% in the third quarter—the fastest rate since the pre-crisis days of 2007.
Earlier this week BOE's Governor Mark Carney once again repeated his pledge to keep borrowing costs at a current level until the economy is developing at a sustained pace. And while the BOE has linked its stimulus programme with the unemployment rate, recent signs of a nascent recovery are suggesting the key jobless rate may fall to its benchmark of 7% before 2016 as it is currently expected.
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