Economic experts are predicting the UK could side step a triple-dip recession after new figures suggested the country’s service sector grew at the start of 2013.
According to the Markit/CIPS UK Services Purchasing Managers Index volumes of new business in January increased among transport and communication, business and personal service, computing and IT and hotels and restaurant sectors.
The Index rose above the 50 point mark – which indicates no activity – to 51.5, indicating an increase in confidence as well as business conducted and a return to expansion after December’s first fall in activity for two years.
Respondents to the Markit survey pointed to an underlying improvement in demand and better market confidence.
Chris Williamson, chief economist at Markit said the latest numbers would be accompanied by a “huge sigh of relief”.
“A return to growth of the service sector in January greatly reduces the likelihood of the UK falling back into a “triple-dip” recession.
“Companies reported the strongest rise in services activity for four months, building on the promising news from manufacturers last week, where output was reported to have grown at the fastest rate for 16 months in January.
“Although construction remains a worry and continues to contract, the PMIs collectively point to the UK growing marginally again in January.
The services sector accounts for 75% of the UK economy, and observers commented that expansion was critical to hopes of the country avoiding a technical recession in early 2013.
“Despite the constraints imposed on the UK by the troubles of its largest trading partner [the Eurozone], businesses appear upbeat in these early stages of 2013. Figures from both manufacturing and services PMIs indicate expansions in employment,” said Colin Edwards, economist at the Centre for Economics and Business Research.
“And both indices mirror the findings of the ICAEW/Grant Thornton Business Confidence Monitor – a survey of 1000 businesses in the UK – which shows business confidence at its highest level since the second quarter of 2011, pointing to an expansion of output in the first quarter of the year.”