Evidence that the UK economy has bounced back from a soft patch in the opening months of 2018 has emerged after a closely watched survey of the services sector showed stronger than expected activity last month.
In the latest sign that bad weather held back the economy during the first quarter, the health check by the Chartered Institute for Procurement and Supply and IHS Markit reported the strongest growth in eight months.
IHS Markit’s chief economist, Chris Williamson, said the improvement shown by the service sector suggested the economy would expand by 0.4% in the second quarter – double its rate of growth between January and March.
With the June IHS Markit/Cips surveys for manufacturing and construction also beating expectations, the City said chances of an August interest rate rise from the Bank of England’s monetary policy committee (MPC) had increased.
“Stronger growth of service sector activity adds to signs that the economy rebounded in the second quarter and opens the door for an August rate hike, especially when viewed alongside the news that inflationary pressures spiked higher,” Williamson said.
