Services sector shows strong growth

Britain's dominant services sector continued to drive the UK's recovery last month after figures today showed further strong expansion.

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Job creation in services is surging, Markit said

Britain's dominant services sector continued to drive the UK's recovery last month after figures today showed further strong expansion.

The reading of 60 in the closely-watched Markit/CIPS purchasing managers' index (PMI) - was well ahead of the 50 level that separates growth from contraction.

Although an easing on the previous month's 16-year record of 62.5, survey compiler Markit said it represented another strong month for a sector which accounts for around three-quarters of UK output.

Its chief economist, Chris Williamson, said it handed Chancellor George Osborne more good news ahead of the Autumn Statement.

He said: "The survey continues to signal an impressively strong pace of expansion and one of the best performances for the sector we've seen since data were first collected in 1996."

Adding today's survey to those in manufacturing and construction, Markit said its PMI surveys indicate growth of 1% in the fourth quarter.

Job creation in services is also surging and should sustain the upturn through improved consumer confidence and spending, Markit added.

Backlogs of work increased for an eighth successive month and is likely to encourage firm to continue adding to their workforces.

However, there were signs of price pressures beginning to build, with input cost inflation at a nine-month high.

Economists are hopeful that overall UK growth in the final quarter of the year will match the 0.8% rate seen in the third quarter.

Carl Astorri, senior economic adviser to the EY ITEM Club, said the pick-up in the housing market was a key factor in the services strength, providing further evidence that the current consumer-led growth is being supported by increasing wealth and confidence.

He added: "This growth may be unsustainable over the medium-term, and so the recent shift in the Funding for Lending scheme away from housing loans and towards business investment appears to have been a well-timed move."