Service sector bounce eases triple-dip recession fears

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BRITAIN’S giant service sector bounced back into growth last month, fuelling hopes of avoiding a triple-dip recession.

The latest Markit/Cips purchasing managers’ index (PMI) figures showed the highest reading since September and a marked recovery after the first contraction in activity for two years during December.

Activity in the sector, which accounts for 77 per cent of the UK’s economic output, was helped by a hike in new business levels and increased capacity as firms took on more staff.

The figures have confounded expectations for a snow-hit start to 2013, with many expecting firms to have suffered amid the adverse weather and freezing conditions.

Experts said that the services-sector performance raised hopes that the wider economy would return to growth this quarter, which would see the UK avoid plunging into an unprecedented triple-dip recession.

The services report showed that the sector saw its best gain in employment for six months, while business confidence hit an eight-month high.

Blerina Uruci, an economist at Barclays, said: “Considering the importance of the services sector for the economy, an improvement here bodes well for first quarter growth, although we would point out that the PMI is still far from being consistent with a solid pace of expansion.”