- Chris Williamson, chief economist at Markit
Activity in services industry, the U.K. largest sector, rose at the fastest pace since November last month, adding to signs that the economic recovery will gather steam for the rest of the year and bringing interest rate hike to the forefront. Output in the services sector stayed firmly above the threshold, which separates contraction from expansion, reaching the highest level in eight months in July, with Markit/CIPS PMI increasing to 59.1 up from the previous month's upwardly revised 57.9. Britain's services sector activity, which accounts for 78% of total gross domestic product, has cooled since October 2013 when Markit's headline index reached the highest level since May 2007. A similar survey of manufacturing declined to a one-year low last week, but the rebound in services took the composite PMI for the private sector as a whole to a three-month high. This may encourage the Bank of England to reconsider a prediction made in May that the economy would slow slightly in the second half of 2014.
BoE Governor Mark Carney will present a quarterly update to the central bank's economic forecasts on August 13 and is also likely to provide some guidance on how much room Britain's economy has left to grow before inflation pressures urges a rate increase.
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