GROWTH in the UK's dominant services sector accelerated last month to its fastest pace since March 2012, a survey shows.
The survey, published yesterday by the Chartered Institute of Purchasing and Supply and financial information company Markit, fuelled hopes that the struggling UK economy might achieve solid growth in the second quarter.
The UK economy dodged triple-dip recession in the first quarter of this year with a modest 0.3% rise in gross domestic product. But UK GDP remains well below its peak ahead of the onset of the Great Recession of 2008/09.
Markit chief economist Chris Williamson forecast, on the basis of the services report and CIPS's surveys on manufacturing and construction earlier this week, that UK GDP might rise by 0.5% in the second quarter.
CIPS's business activity index for UK services rose from 52.9 in April to 54.9 in May on a seasonally adjusted basis, moving further above the level of 50 which is calculated to separate expansion from contraction. May's reading is the highest since March 2012.
And the new business index for services jumped from 54.2 in April to 57.2 in May, to signal the fastest rate of increase of incoming work for more than three years.
Employment in the services sector rose for a fifth consecutive month, although the rate of recruitment remained modest by historical standards.
CIPS's survey of UK manufacturing, published on Monday, showed this sector achieved further growth in May, following marginal expansion in April. This growth follows two consecutive months of decline in the manufacturing sector, according to CIPS's survey.
CIPS's latest report on the UK construction sector, published on Tuesday, showed that it eked out marginal growth in May, after six consecutive months of decline.
Martin Beck, UK economist at consultancy Capital Economics, said: "A weighted average of the three CIPS surveys points to the economy growing by about 0.5% in Q2."
He added: "Admittedly, such a rate would still be pretty modest for an economy emerging from a long period of recession and stagnation. And a question mark remains over how easy it will be to sustain growth in the face of significant headwinds.
"But evidence that the recovery may be establishing some momentum is becoming ever more convincing, as is the likelihood that the MPC [Monetary Policy Committee of the Bank of England] will hold fire on more policy stimulus for the foreseeable future."
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The May services sector purchasing managers' survey not only adds to a recent stream of improved news on the UK economy, but is among the most encouraging of the lot given the dominant role of the services sector.
"It now looks increasingly likely that the UK economy will grow by at least 1% in 2013. Still hardly great, but significantly better than seemed likely even a few weeks ago."
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