UK Services Sector Surges in July

Britain’s dominant services sector enjoyed a stronger than expected July, raising expectations that one or more policymakers at the Bank of England will vote for a rise in interest rates at Thursday’s meeting.

Activity in the sector – which includes restaurants, hotels, transport and business services and accounts for more than three-quarters of the economy – rose at the fastest pace in eight months according to the Markit/CIPS services PMI.

The headline index rose to 59.1 from 57.7 in June, where anything above 50 indicates expansion. Economists were expecting a more modest increase to 57.9.

The figure offsets weakening growth indicated in the equivalent surveys for the manufacturing and construction sectors, suggesting the third quarter got off to a reasonable start in July following growth of 0.8% in both the first and second quarters.

Chris Williamson, chief economist at Markit, said: “The survey data point to the growing likelihood of yet another strong economic expansion in the third quarter. We would expect to see GDP rise by 0.8% again if the surveys hold their current levels.”

Economists said the better-than-expected PMI increased the prospects that one or members of the Bank’s nine-strong monetary policy committee will vote for a rate rise when it meets for its monthly policy decision on Wednesday and Thursday. It would be the first time a member voted for a rise since rates were cut to an all-time low of 0.5% in March 2009.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza