LONDON: Private sector services grew more than expected in June, suggesting the UK’s economic recovery picked up going into the second half of the year.
The Markit/Cips purchasing managers’ index (PMI) rose by 2 points last month to 58.5, exceeding forecasts in a Reuters poll and remaining above 50, the figure that separates growth and contraction.
Combined with similar manufacturing and construction surveys this week, Markit said the gain suggested Britain’s economy expanded by about 0.5% from April through June, compared with 0.4% in the first three months of the year.
But it warned that the recovery looked increasingly unbalanced. Growth in British manufacturing declined to its lowest level in more than two years last month, according to its survey on Wednesday.
The latest services PMI increases the likelihood that the Bank of England will raise interest rates this year, from a record low 0.5%, Markit said. “But policymakers will want to see further improvements in the data, including signs of a sustainable upturn in pay growth, before feeling comfortable that the UK economy is ready for higher interest rates,” said Chris Williamson, chief economist at Markit.
The detail behind the upbeat PMI reading, which does not include retailers or the public sector, sent mixed signals. Services companies took on staff at the slowest pace this year. New orders also increased at the weakest pace so far in 2015. However, businesses’ optimism about the coming year held broadly unchanged at a high level.
The latest composite PMI, which combines the dominant services sector, plus construction and manufacturing, rose to 57.4 from 55.8.
