Service industry powers ahead

Activity in the dominant services industry accelerated in July according to the latest major survey of the sector, posting the quickest rate of expansion since last November.

The Markit/CIPs Purchasing Managers’ Index for services climbed to 59.1, up from 57.7 previously, with any reading above 50 indicating growth.

“The domestic economy clearly continued to boom in July” said Chris Williamson, chief economist at Markit. Samuel Tombs of Capital Economics said that the survey data “provides reassurance that the recovery is not losing pace”.

The strong reading, which was higher than analysts’ expectations, pushed sterling up a fifth of cent against the dollar to €1.6887 as traders’ expectations of an early rate rise from the Bank of England strengthened.

However the survey also suggested that output prices barely rose in the month, which suggests inflationary pressure is not building.

There was also a jump in the equivalent survey of services in the eurozone, which increased to 54.2 in July, up from 52.8 in June.

That took July’s composite survey reading for the single currency bloc – which includes all sectors of the economy – to 53.8. Markit said that suggests the eurozone is growing at a quarterly rate of 0.4%. However, new business growth in the eurozone decelerated and headcount barely increased in the month.