UK economy growing fastest among developed nations

The UK economy grew at its fastest rate in sixteen years during the third quarter of 2013, according to the Chartered Institute of Purchasing and Supply (CIPS).

In another report, house prices increased by 6.2%, more than twice the inflation rate. Analysts say this is due in large part to the coming launch of the Government’s Help to Buy cheap credit scheme.

The Markit/CIPS PMI (Purchasing Managers Index) for the services sector posted at 60.5 in August, compared to 60.2 in July.

David Noble, CIPS CEO said:

“Optimism abounds as the UK services sector, combined with manufacturing and construction, completes a glowing picture for the UK economy. Service providers reported the fastest growth since December 2006 and the sharpest rise of new business for over 16 years. As a result, confidence remains high, providing a platform for investment and expansion for the rest of the year.

In contrast, employment was a little stilted, but burgeoning order books and the sharpest rise in backlogs since February 2000 means this should be of little immediate concern for an indicator which tends to lag, and we expect staff numbers to improve by the end of the year.

Input costs have continued to climb in August, and firms sought to offset these with their own price increases reflecting positive business expectations and market optimism. Based on this set of data, we are anticipating the current sequence of UK service sector expansion to be extended over the coming months.”

According to Markit Group Limited, the all-sector PMI, which measures business activity across the private sector economy, dropped slightly in September to 60.4, but only marginally compared to the 60.6 August record high.

Over the third quarter of 2013, the average PMI reading stood at 60.2, the highest figure since 1998 when comparable data were first compiled.

Markit estimates that the UK economy grew by 1.2% during the third quarter, compared to 0.7% in Q2.

Markit reports that more companies took on extra staff during Q3, 2013. The all-sector PMI Employment index reached its highest posting in September since August 2007. Employment growth was especially active in construction, services and manufacturing.

On October 25th, Market Business News reported that the British Economy grew 0.8% during Q3 2013.