Belfast Telegraph

Hiring continues to rise but growth slows in services

By Roger Baird

Growth among Britain's services firms suffered a slight dip last month but the sector still hired staff at the second-fastest rate on record.

In a sign that the UK economy has started the year on the front foot, the latest CIPS/Markit purchasing managers' index gave a reading of 56.7 in February, down from 57.2 in January but above the no-change mark of 50.

The survey said a combination of a three-month high in new business volumes and work backlogs led to employment rises that have been bettered only once since the report began in 1996.

Firms said the rise in activity was the result of a general pick-up in market conditions, helped by a rise in promotions and advertising.

A combined output reading from the main sectors of the economy gave a three-month high reading of 57, up from 56.9 in January. This combined reading includes manufacturing, construction and services.

Yesterday's figures offer more signs of a pick-up in pace after the services sector posted a 19-month low of 55.8 in December, amid a slowdown in the overall rate of recovery in the final quarter of last year.

Markit chief economist Chris Williamson said: "The UK economy is on course for yet another robust performance in the first quarter, with growth set to accelerate from the slowdown seen late last year."

Mr Williamson added that the UK's GDP was on track for growth of 0.6% in the first quarter - up from 0.5% in the fourth quarter of last year and in line with the economy's long-term annual trend rate of roughly 2.5%.

Capital Economics chief UK economist Vicky Redwood said last month's fall in service sector activity would probably be reversed by new business expectations. "The slight deterioration in February's CIPS/Markit report on services is a bit of a disappointment, but hardly a disaster." She expects the economy to grow by 0.7% in the first quarter.

Howard Archer of IHS Global Insight said he expected a rate increase from 0.5% to 0.75% by February next year.

Belfast Telegraph

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