Growth in services eases fears of triple dip

The latest Markit/CIPS purchasing managers’ index (PMI) showed an overall reading of 51.8 in February – the fastest growth in five months.

The figures will come as a welcome boost to the Government ahead of this month’s Budget after recent gloomy statistics revived fears that the UK economy could be heading for its third recession in four years.

The recent statistics included the weakest construction figures in more than three years, showing the sector endured its worst month since October 2009, and manufacturing PMI figures for February, which revealed a shock drop in activity.

Chris Williamson, chief economist at survey compilers Markit, said: “Faster growth of the dominant services sector offset downturns in manufacturing and construction during February, meaning the economy is likely to have grown for a second successive month after the downturn late last year.”

The upbeat news follows figures from the British Retail Consortium which showed retail sales grew at their fastest rate in more than three years last month.

Services make up more than three quarters of the British economy and, though yesterday’s figures do not cover retailers or the public sector, Markit said that when combined with manufacturing and construction figures, they pointed to growth of 0.1 per cent in the first quarter of 2013.

“Growth could turn out stronger than this, as there’s good reason to believe that at least some of the weakness in manufacturing and construction was due to business being disrupted by bad weather, meaning a brighter picture may emerge in March,” said Mr Williamson.