The PMI for the services sector, which accounts for around 75 per cent of the economy and covers things like transport, communication, business services and the leisure industry, rose to 54.9 in May from 52.9 in April, easily beating the forecast of 53 expected by most economists. Any reading above 50 indicates growth.
The latest figures were boosted by the arrival of better weather during the month and the sharpest rise in new business growth since February 2010. The upturn in new work was helped by a willingness among customers to commit to new business, the survey panel found.
The combination of results also suggests that growth in the economy in the second quarter of the year will at least match the 0.3 per cent recorded in Q1 and some economists are even predicting a modest rise to 0.5 per cent.
The fact that all the major sectors have shown growth for the first time in a year led a senior Markit economist to comment that the UK economy has "all cylinders now firing".
The economist added that the increasingly buoyant picture and improved outlook suggested by the data effectively “kills off” any chance of the Bank of England's Monetary Policy Committee (MCP) voting for more stimulus, such as asset purchases, for the foreseeable future.
The MCP will announce today (June 6) whether or not it will boost the economy with further quantitative easing but the news this week means that this is now very unlikely.
The meeting will be the last attended by Bank of England Governor Sir Mervyn King, before Mark Carney replaces him on July 1.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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