HOPES were high today that a key snapshot of Britain’s powerhouse services sector will provide a third shot in the arm for the economy.
A strong reading for the latest Markit and Cips purchasing managers’ index (PMI) for the sector would follow better-than-expected PMIs for construction and manufacturing. Yesterday it emerged that UK construction output almost returned to growth in April – the best performance in six months for a sector that has been the main brake on the nation’s economic growth.
The main activity index rose to 49.4, just below the 50 level that separates growth from contraction but well ahead of forecasts. In March, the index stood at 47.2.
The signs of a steady recovery in construction mirrored a similar outcome for the manufacturing sector PMI on Wednesday.
Tim Moore, senior economist at Markit, said construction firms appeared to have benefited from a catch-up in work after a disruption caused by cold weather earlier in the year. He said: “The overall survey findings are an early indication that construction will act as less of a drag on UK gross domestic product over the second quarter of 2013.”
However, Howard Archer, chief UK economist at IHS Global Insight, added a note of caution, saying: “The sector undeniably still faces significant headwinds, notably including limited public investment and spending, a still weak economy, comparatively limited housing market activity, and problems in getting funding for large-scale projects.”