LONDON, April 4 (Reuters) - Britain's services activity
recorded the best growth in seven months in March, concluding a
quarter of growth that will have been mirrored in the wider
economy, a survey showed on Thursday.
KEY FIGURES FROM MARKIT/CIPS PMI SURVEY
MARCH FEB JAN FORECAST
Services headline index 52.4 51.8 51.5 51.5
New business index 54.1 53.8 52.7 n/f
Composite index (manufacturing, 50.9 50.7 51.7 n/f
construction and services)
- Headline business activity index highest since August
- New business and business expectations indices highest since
ALAN CLARKE, SCOTIABANK:
'I thought it was OK, a reasonable improvement which is
obviously welcome. But is it enough to avert the triple-dip
(recession) when we know there is going to be a sizeable
subtraction from construction? It's probably not enough. It is
probably consistent with service sector output up by about 0.2
percent quarter-on-quarter. I think we need about 0.5 (percent)
quarter-on-quarter in that sector to avoid a triple-dip... To be
honest, I've just been rethinking do we grow at all this year?
The third estimate for Q4 GDP showed real disposable incomes
shrinking and I think there is more of that ahead. Inflation is
picking up. Employment growth is not maintaining the stellar
pace that it had over the last year. Consumers are going to be
weaker. Government spending is going to be weaker.'
MARTIN BECK, CAPITAL ECONOMICS:
'Despite a modest uptick in the UK CIPS services survey in
March, a so-called triple-dip recession is still hanging in the
balance... A weighted average of the three CIPS surveys suggests
that the economy may still have only flatlined in this quarter.
'The MPC will nonetheless probably stay its hand at more
loosening in its decision today. But with any economic expansion
at all in the first quarter still in doubt, we doubt this
inaction will last for long.'
JAMES KNIGHTLEY, ING:
'Taking these three (PMI) reports together, the survey
compiler suggests that it is consistent with positive GDP growth
in the first quarter of 2013 of 0.1 percent quarter-on-quarter,
meaning that the UK will avoid its third technical recession in
five years. It also supports the evidence seen in the broader
British Chambers of Commerce survey earlier this week that the
UK did post modest growth in the quarter. Consequently, this
will further diminish the probability of any policy change at
today's Bank of England MPC meeting. Nonetheless, we are
concerned that bad weather in January and March could impact on
the GDP calculations, so we still think it will be 50:50 on
whether the UK does indeed post a positive first-quarter 2013
GDP number on April 25.'
PETER DIXON, COMMERZBANK:
'We seem to have got a positive surprise, which makes a
change given some of the poor numbers you had this week. Just
looking at the weighted number - manufacturing, services,
construction - it came at 51.1 in my estimates and the quarter
one average (in the survey) was 50.9. I think what that's
telling us is that there's just enough hope that we might yet
avoid the triple-dip. I wouldn't want to bet a house on it but
it's a sufficiently positive number to give us some hope.
'I don't think there's much chance of any (Bank of England)
action today. Whether we get more QE later in the year depends
upon how the data pans out over the course of the coming
BRIAN HILLIARD, SOCIETE GENERALE:
'I'm amazed at the strength of the numbers, in particular
the new orders. It should allow the PMI to hold up well in the
coming months, though those orders numbers are surprisingly
'It should allay fears of a triple-dip recession.'
'It's very good for sentiment and will remove any
possibility of (Bank of England) policy easing today, but we
hadn't expected any.'
DAVID TINSLEY, BNP PARIBAS:
'They are good numbers. They confirm that all is not lost in
terms of Q1 GDP. The service sector needs to deliver fairly
substantial growth for the overall economy to increase in Q1,
and the survey today suggests that certainly is possible. It is
not guaranteed but it certainly is possible... The contrast is
particularly strong when it comes to the euro zone where the
numbers are mired in recession and in some regards it's a sort
of check against excessive pessimism with regards to the UK. The
economy is certainly not going as fast as it should be growing
or could be growing, but nonetheless it's not shrinking either
which is reassuring.'
CHRIS WILLIAMSON, MARKIT:
'The government and Bank of England will breathe sighs of
relief in seeing signs of a gathering upturn in the service
sector during March, which looks set to have helped the UK avoid
a triple-dip recession by the narrowest of margins. Business
activity grew in March at the fastest rate since the
Olympics-related upturn seen last August.
'With growth of the service sector offsetting contractions
in manufacturing and construction, the PMI survey data
collectively point to the economy having grown by a mere 0.1
percent in the first three months of the year.
'It is likely that the poor weather caused disruptions to
many businesses in recent months, meaning the underlying
recovery trend is likely to be stronger than the recent data
suggest. We would therefore expect to see faster economic growth
in the second quarter and, barring any surprises such as a
further worsening of the eurozone crisis or severe weather,
monetary policy is set to be on hold for the foreseeable
(Reporting by William Schomberg, Olesya Dmitracova and David
Keywords: PMI SERVICES/BRITAIN
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