Belfast Telegraph

Calls grow for interest rate rise

By Graeme Evans

Another strong performance by Britain's powerful services sector has stepped up the pressure on policymakers to consider a rise in interest rates.

The Markit/CIPS services purchasing managers' index (PMI) registered 59.1 last month, up from 57.7 in June and well above the measure of 50 which indicates growth.

Economists said the highest reading for the sector since November indicated that GDP growth will at least reach 0.8% in the third quarter of this year.

It is also expected to increase the chances that the Bank of England's monetary policy committee (MPC) will decide to raise interest rates before the end of the year.

Policymakers are meeting this week amid speculation that their discussions may produce a split vote for the first time since July 2011.

The report follows a strong construction sector reading, although manufacturing figures last week were disappointing as firms struggled with the strong pound and weaker demand in key export markets.

The services report found that more staff were recruited to help firms keep on top of current workloads and in anticipation of further growth in the coming months.

Taken across all three CIPS surveys, the rate of job creation eased from June's all-time high but remained consistent, with approximately 100,000 jobs being created by the private sector in July.

The services sector, which covers everything from social work to banking, accounts for about three-quarters of the country's economic activity.

Backlogs of work in the sector rose at a marked and accelerated pace during July.

Belfast Telegraph

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