"More strong growth looks likely as we move into 2014. It is perhaps inevitable, however, that we may see the rate of growth slow compared with the unusually strong pace seen in recent months."
- Chris Williamson, chief economist at Markit
Following a positive 2013 year, where each economic report suggested the central bank will start raising interest rates sooner than it was planned, this year starts on a negative note, as activity in key services sector slowed to a six-month low in December. Activity at sector, which accounts for about 78% of the overall GDP, stood at 58.8 in December, following November's reading of 50.0 and missing analysts' forecasts of 60.3. Though the gauge hit its lowest point since July, it still signalled a historically strong pace of expansion. Despite the fact Markit said they expect a 1% growth in the final quarter, due to a pickup in factory and construction indexes, the Pound plunged 0.4% against the buck hitting 1.6352 soon after the report.
While all pillars of British economy logged slower growth in December, manufacturers saw a positive end to the last year, expecting a moderate growth in output during the next 12 months, a new EEF Business Trends Survey showed Monday. Moreover, a measure of business confidence jumped to the highest level in 20 years, reflecting higher confidence about further economic strengthening. It also suggests companies may intend to boost staff numbers this year, hence, the unemployment rate can fall to its threshold level of 7% sooner than it is thought. A survey conducted by Bloomberg showed the BoE will stay pat on its monetary policy later this week.
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