Monday, March 05, 2012
Service sector slips but still quite strong
Posted by David Smith at 01:00 PM
Category: Thoughts and responses

The service sector purchasing managers' index fell from 56 in January to 53.8 in February, slightly weaker than had been expected. This followed three months of rises. Taken together with the other purchasing managers surveys, the economy appears to be on course for growth of 0.3% to 0.4% in the first quarter, though as the Bank of England has warned, things could be weaker in the second as a result of the additional bank holiday. This is Markit's verdici:

“Despite seeing some loss of momentum in February, the service sector continued to grow at a robust pace, adding to signs that a double-dip recession will be avoided. So far this quarter, the sector has notched up its best performance since the spring of 2010, when the economy was rebounding strongly from the recession.

“Combined with the ongoing modest growth in manufacturing and upturn in the construction sector, the latest services PMI data suggest that the economy will expand modestly in the first quarter, provided that no significant further loss of momentum is seen in March. The outlook in fact seems to have brightened, with business confidence about the year head hitting a 12 month high and firms again taking on more staff in February."