Service Sector Expands At Fastest Pace for 10 Months
06 / Feb / 2012
Britain's dominant services sector expanded at the fastest pace in 10 months in January and firms grew much more optimistic, a survey showed last Friday, crowning a raft of data last week that raised hopes the economy may avoid recession. The figures will be food for thought for the Bank of England as it considers whether to extend its quantitative easing programme of gilt purchases next week, after the completion of the 75 billion pounds it started in October. The Markit/CIPS Purchasing Managers' Index for services rose to 56.0 from 54.0 in December, confounding forecasts for a dip to 53.5 and climbing higher above the 50 mark which separates growth from contraction. The surprise improvement in the sector follows PMI releases showing that manufacturing unexpectedly returned to growth last month, while construction firms became more upbeat despite a slower expansion in activity. Britain's economy shrank in the final quarter of 2011, as manufacturers and construction companies scaled back production. Another consecutive quarter of contraction would tip it into recession. However, Markit's forecast contrasts sharply with that from the National Institute of Economic and Social Research (NIESR) earlier on Friday, which forecast a 0.1% drop in GDP for 2012 as a whole