The latest Markit/CIPS UK services Purchasing Managers’ Index (PMI) shows growth in the services sector is at its strongest rate since 1997.
The Index beat City forecasts to jump to a headline reading of 62.5 last month, up from 60.6 in September, whereas the forecast had been for a slight dip to just under 60.
Alongside strong activity in manufacturing and construction, the results indicated quarterly economic growth of 1.3 per cent, up from 0.8 per cent between July and September this year. However, total economic output for the UK is still less than its 2008 peak.
In order to keep pace with the growth, the rate of private sector jobs growth is now running at more than 100,000 per quarter, Markit said, far higher than the average of 70,000 seen over the past four quarters, according to the Office for National Statistics (ONS).
According to Markit, this could mean that the Bank of England is likely to review raising interest rates much sooner than its current projection of 2016, which is when it predicts that unemployment could fall below 7 per cent. However, that figure may well be reached as soon as next year if recruitment carries on at its current pace.
Activity in the services sector has now expanded for 10 consecutive months, and follows a run of strong business survey data and the economy expanded by 0.8 per cent in the third quarter, making the third consecutive quarter of positive growth.
Meanwhile, taking all the various sectors’ OMIS together, the composite reading is suggesting that fourth quarter growth could rise as much as 1.5 per cent, which would equate to around 6 per cent of annualised growth.