The UK’s service sector grew in December at its fastest rate since July 2015, defying predictions of a slowdown.
This is according to the latest Markit/CIPS purchasing managers’ index, which recorded a reading of 56.2 in December, up from 55.2 in the previous month. A reading above 50 indicates growth.
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The results indicate that the sector, which accounts for around 80 per cent of the UK’s total economy, grew in every month of the final quarter of 2016.
Improved confidence, but inflationary pressure
Service employment also grew, while respondents reported increasing confidence in the general economic outlook for the current year.
But input prices also rose, with inflationary pressure having risen sharply and consistently over the past twelve months.
Markit reported that business owners attributed growth to a range of factors including marketing, new product launches, government contracts, export business, and new accounts.
Growth across the board
CIPS’ David Noble said: “Exceeding all expectations, the year ended on a high for the service sector, which rounded off the strongest quarter in 2016 as new business an employment levels continued to grow.
“The overall rate of activity growth accelerated for the third successive month to the fastest since mid-2015.”
Indices for manufacturing and construction, released this week, also indicated strong growth. Combined, the three measures recorded a reading of 56.4 in December – the highest level for more than twelve months.