UK service sector on the rise amid warm weather and royal wedding

Services output in the United Kingdom increased by 0.4% for the three months to May, with a surge in activity in the wholesale, retail and motor trade sector accounting for the bulk of the pick-up.

Economists had anticipated a rise of only 0.3%.

According to figures released on Tuesday by the office for national statistics, the services sector as a whole, which accounts for almost 80% of the UK’s GDP, benefited from May’s better weather, the royal wedding and deferred spending from the first quarter where frost and snow caused widespread disruption.

Compared with April, activity in the wholesale, retail and motor trade raced ahead by 1.3% and was 0.9% higher over the latest three-month stretch, contributing 0.43 percentage points - by far and away the most of any sub-sector - to the overall rate of growth in services during that period.

Other areas that performed well during the period included transportation and storage, which saw month-on-month growth of 0.7%, and information and communication which grew 0.5% versus May and quarterly growth of 1%.

Real estate activity, which at 17.4% of services is the largest category in the index, saw steady month-on-month growth of 0.2% and quarterly growth of 0.4%.

Despite the seemingly good news, Howard Archer, chief economic advisor to the EY ITEM Club, did not view the service sector growth as indicative of the economy "recouping any of the activity lost to bad weather and other erratic factors in Q1."

However, Jacob Deppe, head of trading at the online trading platform Infinox, said he expected the growth to "be stronger still" through June due to the World Cup "injecting momentum into the economy".

"As repeatedly strong services sector data shows, UK consumers have a spring in their step and this spending is proving to be an adrenaline shot into the arm of UK Plc. Against a backdrop of extreme political uncertainty, if not outright chaos, a solid economic foundation has never been as important,” said Deppe.

The data stems from new monthly and rolling three-monthly sector estimates from ONS, with the services sector in particular now being measured with more frequency than before ONS revised its practices.