Services PMI staves off UK triple dip?

Those much-pored-over March PMIs are in. A tiny growth spurt in the services sector has helped nudge things in the right direction.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
After the deluge of dreary economic data last week, it seems there’s finally a ray of hope. Business activity in the service sector in March grew at the fastest rate since the Olympics-related upturn seen last August. And while MT wouldn’t exactly call a PMI Output Index of 50.9 (up from 50.7 in February) a ‘boost’, any figure above 50 – signalling growth – is devoutly to be wished.

The services PMI is still a far cry from its January peak of 51.7 but goes some way towards redressing the balance after contractions in the manufacturing and construction sectors last month.

And at least the quarter as a whole is looking fair to middling, averaging out at 51.1. That beats the miserable fourth quarter average of 49.8 and is consistent with the 0.1% quarterly increase in UK GDP predicted for the first three months of the year.

The pointy heads at the Bank of England seem to have taken note, deciding to hold off on any further quantitiatvie easing for another month day. The country now seems marginally less likely to slide back into its third recession since the onset of recession in 2008. 

However, with snowflakes falling across much of Britain today, it’s clear that the enduring cold weather will continue to disrupt businesses well into April, smothering growth under a thick blanket of - if not snow - then slush. On the plus side, this means that the underlying recovery trend may be far stronger than the recent data suggest. Without the freezing weather, the UK would be going gangbusters… Perhaps.

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