Yahoo Finance Triple-Dip Fears Ease With Upbeat PMI Survey
The UK's services sector recorded its strongest expansion in seven months in March, helping to ease fears of a pending triple-dip recession.
The main Markit/CIPS Purchasing Managers' Index (PMI) for the dominant service sector climbed to 52.4 in March, from 51.8 in February.
The rise further above the 50 point line that divides growth from contraction confounded economists' forecasts for a drop to 51.5 and was the highest reading since August, when the London Olympics boosted business.
"The Government and Bank of England will breathe sighs of relief in seeing signs of a gathering upturn in the service sector during March," Chris Williamson, chief economist at survey compilers Markit, said.
"(It) looks set to have helped the UK avoid a triple-dip recession by the narrowest of margins."
The British economy shrank at the end of last year and another consecutive quarter of contraction would tip it into a third recession in less than five years.
Official data on how the economy fared in the first quarter is not due until April 25.
But it looks to have made a positive start after an Office for National Statistics (ONS) release showed the strongest growth in services in five months in January.
Services as measured by the ONS make up more than three-quarters of British economic activity.
However, Markit's survey does not include the public sector or retailers, focusing instead on areas such as transport and communication, business services and entertainment.
Nonetheless, March's improvement in the services PMI offset contractions in manufacturing and construction and points to 0.1% economic growth in the first three months of 2013, Mr Williamson said.
The Bank of England has also revealed it will not expand its £375bn quantitative easing or alter the 0.5% base rate for the time being, although economists expect more asset purchasing before the end of the year.
The European Central Bank also revealed that it would maintain the eurozone base rate at the current record low of 0.75%.
Moreover, Mr Williamson said the economy was probably stronger than recent data suggested because unusually cold and snowy weather early this year hurt many businesses, whether by keeping consumers at home or disrupting deliveries to factories.
"We would therefore expect to see faster economic growth in the second quarter and, barring any surprises such as a further worsening of the euro zone crisis or severe weather, monetary policy is set to be on hold for the foreseeable future," he added.
More From Sky News
