Britain's economic recovery 'gaining momentum' as services sector records fastest expansion in six years
Better weather and improvement in the housing market boosted the UK's services sector in July, as it returned to boom-time levels with its fastest expansion in six-and-a-half years.
The Markit/CIPS services purchasing managers index (PMI) revealed that activity among firms registered a reading of 60.2 during the month, up from 56.9 in June.
It is well above the 50 mark, which separates growth from contraction, and is the highest level recorded since December 2006.
Services account for more than three-quarters of the economy, and experts are confident that the sector can help to spearhead the nation's recovery.
It has expanded for the last seven months in a row, while the manufacturing and construction sectors also enjoyed strong growth in July.
"The forward-looking elements from the survey point to a further strengthening of GDP in the third quarter as the UK heads towards self-sustaining economic expansion," commented Paul Smith, senior economist at Markit.
Meanwhile, Martin Beck, UK economist at Capital Economics, added: "A recovery in the dominant part of the UK economy looks increasingly entrenched.
"While some temporary factors may have played a role in boosting activity, a turnaround in the economy's fortunes seems to be in train."
The survey also showed that order backlogs surged at their sharpest rate since early 2000 and sales rose at their strongest level since November 2006.
Elsewhere, employment shot up and confidence about future activity hit its highest level in 15 months.
These upbeat signals for the economy will ease pressure on the Bank of England to pump more money into the economy.
New Bank governor Mark Carney is set to give his first inflation report on Wednesday and is expected to introduce a policy of forward guidance on economic stimulus, such as pinning interest rate rises to milestones like unemployment.
Also commenting on the data, ING Bank economist James Knightley said it "adds to the evidence that the UK economy is gaining momentum and therefore there is little need for any further direct stimulus in the form of rate cuts or quantitative easing".
Copyright Press Association 2013