British economy expected to show recovery as services sector output hits four-month peak

British economy expected to show recovery as services sector output hits four-month peak

The UK economy is expected to have picked up from a sharp slump at the beginning of the year after output in Britain's powerhouse services sector surged to a four-month high in April.

The closely-watched Markit/CIPS purchasing managers' index (PMI) reached 55.8 last month up from 55.0 in March and above economists' forecasts of 54.4.

A reading above 50 indicates growth.

The jump in services activity was underpinned by the fastest growth in new work this year, driven by robust business-to-business demand, new product launches and rising sales abroad.

The result delivers a hat-trick of good news for the UK economy after separate PMI figures earlier this week showed manufacturing output reached a three-year high in April and the construction sector rebounded to record its fastest growth this year.

Chris Williamson, chief business economist at IHS Markit, said the three surveys point to UK gross domestic product (GDP) growing at 0.6% at the beginning of the second quarter after GDP slumped to 0.3% in the first quarter of this year.

"While we expect consumer spending to slacken in coming months, with the April survey highlighting continued weakness in sectors such as hotels, restaurants and other household-facing businesses, there's good reason to believe that at least 0.4% GDP growth can be achieved in the second quarter as a whole.

He added: "The strengthening of growth and the upturn in prices will bolster calls for higher interest rates.

"But weak growth in the consumer sector remains a concern, and is something which could intensify in coming months as consumer prices rise further."

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