Dominant services sector setting the pace again

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Britain’s powerhouse services sector grew at its fastest pace in seven months in March as the pace of the wider economic upturn picked up over the first quarter, according to new figures.

Services, which represent more than three-quarters of UK output, gave a reading of 58.9 last month on the closely-watched CIPS/Markit purchasing managers’ index (PMI) survey – where 50 separates growth from contraction.

Together with figures from other sectors, it indicates that gross domestic product (GDP) grew by 0.7 per cent in the first three months of this year, up from 0.6 per cent in the final quarter of 2014.

The reading from the services sector, an improvement on the 56.7 seen in February, was the best since August last year. Manufacturing figures for March published last week had also shown a pick-up though construction growth slowed.

It comes as the latest growth indicator from the CBI also pencils in an uptick in growth to 0.7 per cent for the first quarter.

Chris Williamson, chief economist at Markit, said: “The UK economy moved up a gear in March, recording the strongest pace of growth since last August.

“The three PMI surveys collectively indicate that the economy grew by 0.7 per cent in the first quarter, reviving from the slowdown seen late last year.

“Faster growth of new business and improved expectations of prospects for the year ahead also bode well for the upturn to retain strong momentum as we move through the spring.”

Services firms attributed growth to the wider economic recovery, improving confidence, winning new customers and product development, the report found. The survey showed a marked increase in the volume of new business.