Strong growth for service sector boosts UK economy

Growth in the UK’s service sector hit an eight-month high in June, indicating that the UK economy is beginning to ‘pick up speed’.

The news follows the publication of IHS Markit’s latest Purchasing Managers’ Index (PMI), which showed an impressive reading of 55.1 in June.

This was up from a reading of 54 recorded the previous month – with any reading above 50 typically considered as indicative of growth.

Economists and other commentators have been keen to point out that the June reading marks the strongest increase in service sector activity since October 2017.

Meanwhile, IHS Markit’s research in other areas for June reveals that growth in the manufacturing and construction sectors also exceeded expectations.

In light of the news, the group has estimated that the UK economy as a whole grew by approximately 0.4 per cent in the second quarter (Q2) of 2018.

This figure is representative of a 0.2 per cent increase over the rate of growth recorded in the first quarter (Q1) of the year.

The good news has already pushed up the value of sterling against the dollar significantly, by around 0.13 per cent.

Meanwhile, Reuters has pointed out that the impressive figures are likely to increase the chance that the Bank of England (BoE) will move to increase its base rate at its next Monetary Policy Committee (MPC) meeting.