UK services sector defies fears of Brexit slowdown
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PMI report shows fastest growth since July 2015 but input costs rising
Britain’s dominant service sector grew at the fastest rate in nearly a year and a half, according to the Iatest survey of purchasing managers published on Thursday.
The Markit/CIPS purchasing managers' index for services rose for the third month in a row to 56.2 in December from 55.2 in November. This is the fastest expansion since July 2015.
Employment in the sector increased at the same pace in November, the highest rate of growth in seven months. Confidence in the economic outlook for the next 12 months also improved among the purchasing managers surveyed.
“A buoyant service sector adds to signs that the UK economy continues to defy widely-held expectations of a Brexit-driven slowdown,” said Chris Williamson, chief business economist at IHS Markit.
The services PMI follows surveys of manufacturing and construction earlier this week which found those sectors were also growing rapidly.
The ‘all sector’ PMI rose to 56.4 in December from 55.1 in November, its highest level in over a year.
All three surveys found input prices for businesses were rising rapidly — Thursday’s services report showed input inflation at its highest level for more than five years.
Respondents to the three surveys have listed a cheaper pound as well as higher commodity prices as reasons for the inflation. Purchasing managers working in the services sector also mentioned higher labour costs.