Robust figures for the service sector, which is accountable for almost 70 percent of UK output, indicate that it isn’t all doom and gloom for the UK economy, despite forecaster’s gloomy predictions. Data recently released indicates a huge jump in December for businesses in the service sector, including hairdressers, accountancy and legal advice.
Forecasters had predicted a disastrous final quarter of 2011, but the CIPS/Markit index of purchasing managers rose to 54 during December, in comparison to November’s figure of 52.2. A figure which is greater than 50 indicates the expansion of the sector. The index accurately tracks growth, indicating an improved outlook for employment and businesses.
December’s figures were far better than previously forecast, including construction, manufacturing and exports. According to Markit Economic Research, although the figures were much higher at the end of 2011, it was at its weakest pace since the second quarter of 2009, the recession.
According to financial group ING’s James Knightly, hopes for a recovery of the UK economy have received a much needed boost with the higher figures for construction and manufacturing. Strong sales were reported during the festive season by high street stores Waitrose, Clinton cards and JJB sports retailer. However, results of a survey conducted by the Bank of England warn that the euro banking crisis could result in the tightening of credit conditions. The end of the week saw the euro fall to its lowest in 16 months against the dollar and pound. The euro sank to its lowest against the Japanese yen in 11 years.
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