UK services growth exceeds forecasts, proves Britain on its way to economic recovery
For the first time in over six years, activity in the services sector in the UK grew to its fastest pace. It even exceeded the forecasts given by economists last month. Markit Economics and the Chartered Institute of Purchasing and Supply revealed that services activity increased from 56.9 in June to 60.2 today. This was the highest growth since December 2006. Bloomberg estimated that out of the median of 30 estimates in their News Survey, economists gave a forecast of only 57.4 growth.
The report suggested a continuous improvement of the British economy beginning in the third quarter this year. Economists are looking forward to the Bank of England's economic forecast which is set to be published in two days. ING Bank NV economist James Knightley said more direct stimulus is not likely to happen. "The U.K. economy is gaining momentum and therefore there is little need for any further direct stimulus in the form of rate cuts or QE. Instead, it is about maintaining the current accommodative monetary-policy environment to ensure the recovery continues. This means of course forward guidance," he said.