British service sector activity expanded at the fastest pace in four months in February on strong upturn in new work, survey data from IHS Markit showed Monday.
The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index, rose more-than-expected to 54.5 in February from 53.0 in January.
Any reading above 50 indicates expansion in the sector. The score was forecast to rise to 53.3.
The rise in the services PMI in February will help to assuage fears of a broad-based slowdown in the first quarter, instead suggesting that the economy has broadly maintained its pace, Paul Hollingsworth, an economist at Capital Economics, said.
That should keep the door open for the Bank of England’s Monetary Policy Committee to hike interest rates again in May, the economist noted.
The survey showed that the overall growth in February was driven by the sharpest rise in new work since May 2017. Incoming new business picked up for the second straight month as service providers commented marked growth in business-to-business sales.
Employment growth accelerated to a five-month high in February, driven by stronger-than-expected sales growth and subsequent efforts to expand business capacity.
Nonetheless, service providers cited concerns about tight labor market conditions and reduced candidate availability to fill vacancies.
On the price front, input price inflation eased to its lowest since August 2016, despite higher staff salaries and transport costs. Meanwhile, selling prices rose at the weakest rate for six months.
Service providers signaled that confidence towards the year-ahead business outlook eased since January. However, the level of optimism remained higher than at any time seen in the second half of 2017.