Companies taking on new staff at fastest pace since 1998

Although Markit/CIPS’ services purchasing managers’ index (PMI) slipped in February to 58.2, its lowest level since June, from 58.3 in January, it still showed robust growth at firms ranging from banks to hairdressers despite the bad weather.

Readings above 50 signify growth, which has been the case for 14 straight months now.

Orders in the economy’s dominant sector grew more quickly and optimism about the coming year rose to its highest in four-and-a-half years.

The composite index combining PMIs for manufacturing and construction, released earlier this week, plus the services sector edged down to 58.6 in February from January’s 59.1.

But a composite sub-index showed the fastest rate of jobs growth since at least January 1998, when the data series was launched.

Overall, survey compiler Markit said the data pointed to economic growth of around 0.7 per cent from January to March – the same as in the final three months of last year.

“There’s no end in sight to the good news,” said Markit chief economist Chris Williamson.

“With business confidence in the services economy rising, growth should pick up again in March, adding conviction to the growing consensus that the economy is set for its best year of growth since 2007, with the rate easily surpassing the 1.8 per cent expansion seen last year.”

Mr Williamson said the performance was all the more remarkable given the bad weather in February that caused heavy flooding in some areas.

Overall, there was little that might worry Chancellor George Osborne, who has said he plans to help boost investment and exporters in his Budget, due on March 19.

The services sector business expectations index shot up to its highest level since September 2009 – and Markit said greater confidence encouraged companies to hire more staff.

Only five per cent of respondents predicted a worse year ahead, compared with 54 per cent who expected increased activity.

The survey suggested that inflation eased further in February.