Activity in the UK service sector accelerated last month, according to a closely watched business survey released on Wednesday.
Research firm Markit said its services purchasing managers’ index rose to 54.3 in August, compared to forecasts for a reading of 53.9.
The prior month’s reading was 53.5.
The research group indicated that despite the stronger upturn in service sector activity, business optimism hit a five-month low.
The report also highlighted that input cost inflation accelerated, led by fuel prices and wage pressures.
IHS Markit chief economist Chris Williamson commented that the reading was welcome news after disappointing news from the manufacturing and construction sector.
“The survey data indicate that the economy is on course to expand by 0.4% in the third quarter, a relatively robust and resilient rate of expansion that will no doubt draw some sighs of relief at the Bank of England after the rate hike earlier in the month,” he said.
Williamson emphasized that the report highlights the fact that the British economy has become reliant on services to support growth, particularly the financial service sector.
“Business expectations for the year ahead meanwhile sank markedly lower, down across all three sectors to one of the lowest levels seen since the EU referendum, largely reflecting increased anxiety over Brexit negotiations,” he commented.
“Given the increasingly unbalanced nature of growth and the darkening business mood, risks to the immediate outlook seem tilted to the downside,” Williamson concluded.
