Strengthening British services shows growing economy: official data

LONDON, Jan. 4 (Xinhua) -- The services sector purchasing managers' index (PMI) rose to 54.2 in December (above 50 is growth) in Britain, according to Thursday's figures, after falling to 53.8 in November from a six-month high of 55.6 in October.

This makes a fourth quarter average of 54.5, above the third quarter average of 53.5, indicating a quickened rate of economic growth.

Government GDP figures for Q3 revealed growth at 0.4 percent on the quarter, and this week's combined PMI figures show that pace is likely improved for Q4.

December's better services survey follows on from a softer but still decent survey for manufacturing and a weaker construction survey on Tuesday and Wednesday.

"Overall it is reassuring the rise in services PMIs, and the all-sector PMI points to growth of about 0.5 percent in Q4, up on Q3' 0.4 percent," Paul Hollingsworth, Britain economist at Capital Economics, a London-based financial data firm, told Xinhua on Thursday.

"That would mean growth for 2017 would come in at 1.8 percent, only just down from 2016's 1.9 percent meaning that the economy had barely slowed at all," he added, "That is quite remarkable given the rise in inflation and the squeeze on household earnings."

Inflation has risen sharply from 0.5 percent at the time of the Brexit referendum in June 2016 to 3.1 percent in November (the latest figures), driven by a devaluation in sterling caused by the Brexit shock.

Hollingsworth said inflation had likely peaked, and that the rate of growth revealed in PMI figures this week would likely be improved upon throughout 2018 as the squeeze on household income and spending eased.

"The consensus for 2018 is 1.4 percent growth, but if we saw growth continue at the pace indicated in these surveys it would be quite a bit stronger," he said.

He forecast growth of about 2 percent, because "the pay squeeze is going to abate, inflation has reached its peak and will start to fall back."

Hollingsworth added: "Investment growth was greater in 2017 than 2016 and we expect that to continue in 2018."

These factors would indicate an optimistic outlook for 2018, he said. Enditem