Soaring services signal rate rise
PRESSURE on the Bank of England to start raising interest rates mounted today after it emerged that Britain's dominant service sector is growing at the fastest pace for more than a year.
The latest snapshot of the sector, which accounts for around 70% of total output, from the Chartered Institute of Purchasing and Supply revealed that increasing optimism about the economy boosted new business last month by the largest amount since February 2001.
The survey's headline business activity registered 54.5 in April, up from 53.8 in March and well above the 50 'boom-bust' level. April's reading is the highest since March 2001.
'Over a quarter of all companies reported that the level of orders placed with them was up on one month ago as greater confidence in the current economic situation has led to previously deferred orders now being commissioned,' said the report.
Today's findings come only two days after CIPS reported that manufacturing activity is growing at the fastest rate for more than two years. Mounting signs of a rapid recovery have prompted some City economists, including HSBC's John Butler, to argue for an immediate rise in rates. However, the MPC is widely tipped to keep rates at 4% when it meets next week.
