Business

UK service sector growth picks up speed

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Activity in the UK's services sector accelerated in March at its fastest pace since August last year, according to a closely-watched survey.

The Markit/CIPS Purchasing Managers' Index (PMI) rose to 58.9 from February's reading of 56.7.

Any reading above 50 indicates growth, while below 50 suggests contraction.

Markit said its three surveys - of the construction, manufacturing and service sectors - taken together implied first quarter economic growth of 0.7%.

It comes as the Confederation of British Industry (CBI) also forecast UK economic of 0.7% in the three months to March, up from 0.6% in the previous quarter.

Last month, the Office for National Statistics (ONS) revised economic growth for the last three months of 2014 up to 0.6% from an earlier estimate of 0.5%.

'Strong momentum'

The UK services sector is by far the largest part of the economy, accounting for about three quarters of economic activity.

Markit said the increase in activity was the result of the wider economic recovery and improved confidence.

Employment activity remained high within the sector while companies had also lowered their costs, Markit added.

Chris Williamson, chief economist at Markit, said the survey results "bode well for the upturn to retain strong momentum as we move through the spring".

"While the data support the view that the next move interest rates will be upward, the lack of inflationary pressures suggests the first hike remains some way off, and probably not this year unless we see some significant upturn in wage growth."

The first official estimate of the UK's economic growth in the first quarter of 2015 is due to be released by the ONS one week before the general election.

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