"This release is not strong enough to take the prospect of more QE on Thursday off the table, but it certainly muddies the waters somewhat"
- David Tinsley, an economist at BNP Paribas SA
Britain's services sector grew at its fastest pace for five months in January, raising hopes that the U.K. economy may avoid falling into another recession, the Office for National Statistics said Thursday. Output at services sector, which makes up more than three-quarters of nation's annual economic output, inched 0.3% up in January from December. Year-over-year, output rose 0.8%. The growth was mostly led by transport, storage and communications, which added 1.3%, as well as government and business services. The U.K. economy shrank in the last three months of 2012 in line with analysts' expectations, with gross domestic product falling by 0.3%. The economy is widely expected to contract in the first quarter of 2013, and if so, it will fall back into recession again, which is defined by two consecutive quarters of negative growth. However, latest data is adding to signs that the economy may start gaining momentum.
"This release is not strong enough to take the prospect of more QE on Thursday off the table, but it certainly muddies the waters somewhat," said David Tinsley, an economist at BNP Paribas SA in London and a former BOE official. "Overall, there remain arguments for doing more."
© Dukascopy Bank SA