UK service sector activity expands more than expected in April, PMI data reveals

The UK's service sector grew more than expected in April, data from Makit/CIPS revealed.

The purchasing mangers' index rose to 59.5 in April from 58.9 a month earlier, more than the 58.5 predicted by analysts. A reading above 50 signals expansion while a reading below 50 indicates a contraction.

The report said business activity increased at the fastest rate since August 2014, driven by a further marked rise in new business. Employment growth continued and sentiment was at an elevated level despite some uncertainty linked to the forthcoming General Election, it added.

“Fears of the economy slumping amid election jitters are allayed as an upturn in service sector activity has helped offset sharp slowdowns in both manufacturing and construction," said Chris Williamson, chief economist at Markit.

“While the robust rates of economic expansion and job creation signalled by the PMI surveys support the view that the next policy move at the Bank of England will be a rate rise, the lack of inflationary pressures and weakness in manufacturing and construction suggests policymakers will be in no rush to hike, meaning the first rate rise is unlikely to take place before the end of the year.”