Solid service sector performance points to growth

The service sector makes up more than three-quarters of the UK's GDP

The UK’s service sector performed above expectations in February and grew at its fastest pace for almost half a year, the latest Purchasing Managers’ Index (PMI) figures have shown.

The PMI figure came in at 51.8; anything above 50 indicates growth in the sector. It rose +0.3 on January’s performance and was above expectations of 5.10 by economists.

With the sector making up more than 75% of the UK economy, it now looks likely that there will be growth in Q1 despite less positive news coming from manufacturing and construction PMIs.

Confidence amongst firms in the sector also continued to increase reaching a nine-month high of 67.6, up from 67.2 in January.

The Bank of England is set to announce whether to further stimulate the economy through quantitative easing on Thursday. However, after positive news coming from the services sector, the probability of the Bank adding to the £375 billion already filtered into the economy has lowered.