The UK services sector expanded more than expected in June, according to the authoritative IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) released today.
Seasonally adjusted figures were revised up to 62.4 in June versus 61.7 expected, and only marginally lower than the May peak, which was a 24-year high.
Demand unleashed
Firms reported a surge in demand for consumer services thanks to looser pandemic restrictions, and a rise in business investment in response to the improving economic outlook, the Guardian reports.
Although job creation was the fastest for seven years, staff shortages led to the highest level of backlogs since the survey began in 1996, Reuters reports. This pushed up prices by the most on record for inputs and prices charged.
Inflation up
The UK economy is expected to grow faster than other advanced economies this year, helped by its early COVID-19 vaccination rollout and stimulus programmes. However, inflation is running above the Bank of England’s 2% target and the Monetary Policy Committee announced that it expected inflation to go above 3% “for a temporary period”, the BBC reported.
In the Scotsman, Martin Beck, senior economic advisor to the EY Item Club, said the figures showed an “exceptionally strong” pace of growth.
He said GDP was up by 5% in Q2, and that “a period of above-target inflation will persist through the year, but this could well prove to be transitory”.