The purchasing managers' index data for the UK released by Market Economics, shows a sharp increase in services sector activity in the month of July, with the index standing at 60.2, well above the 57.2 forecast. It comes as the best growth services had seen since 2006.
The PMI is compiled from data contributed by purchasing managers across the UK, with values of above 50 representing increasing growth in the sector and values below representing increasing contraction.
A value of 60.2 thus represented extremely robust growth for the services sector; and, given the strength of that sector in the national economy, augured well for overall growth in the third quarter of 2013.
The release today comes following the PMIs for the construction and manufacturing sectors, which were each similarly strong, with the former coming in at 57.0, up from 51.0 in June, while the latter came in at 54.6, up from 52.9 the month before.
Both of those figures represent the fastest growth in their sectors for years, and indicating that the slump was well and truly coming to an end. According to Markit's chief economist, Paul Smith, the service sector "appears to have genuine momentum".
Smith added although it was an early call on one month's data, the forward-looking elements from the survey pointed to a further strengthening of GDP in Q3 as the UK headed towards 'escape velocity' and self-sustaining economic expansion.
According to Steven Bryce, analyst at Credit Suisse, the data point provided yet another piece of evidence that the UK was experiencing a sharp and persistent uptick in economic activity. The Purchasing Manager's Index surveys had seen consistent improvement now for several months.
He added, the services PMI had risen for a consecutive seven months, which was one of the longest periods of consistent increases in the history of the series. He added, the services output index had risen by 8.8 points since January 2013 and additionally, new orders less backlogs of work were in expansionary territory.
According to John Zhu, UK economist at HSBC, the headline UK PMI services activity index demolished consensus expectations in July, rising to 60.2, the highest reading since 2006. He added, furthermore, the composite PMI implied the fastest pace of expansion since the data began and the strong data gave forward guidance more potency.