UK service sector Q3 growth strongest in 16 years

UK service sector Q3 growth strongest in 16 years

LONDON - Britain's huge service sector rounded off its strongest quarter in more than 16 years with solid growth in September, suggesting the economy is approaching the momentum of pre-crisis days.

The main Markit/CIPS Purchasing Managers' Index (PMI) for services, which make up more than three-quarters of the economy, came in at 60.3 last month, just off August's near-seven-year high of 60.5 and far above the 50 level that indicates no change in activity.

Combined with surveys of British manufacturing and construction earlier this week, the data imply the economy grew 1.2 per cent in the July-September period, Markit said - a rate of expansion not seen since late 2007.

Employment, which is watched closely by the Bank of England as the key indicator in its new policy of guidance on interest rates, grew in all three sectors.

The pound rose to near a nine-month high against the dollar, and prices of low-risk British government bonds fell further after the release.

"There is no mistake the economy is growing jolly fast," said David Tinsley, an economist at BNP Paribas.

A recovery in the housing market was one of the main drivers of growth in the service sector while consumer services continued to struggle, Markit noted.

Data from mortgage lender Halifax showed earlier on Thursday that British house prices are rising at the fastest annual rate in more than three years, helped by a healing economy and government lending schemes.

Halifax noted signs that housing supply was beginning to pick up as well, with more homeowners putting their properties up for sale and house building on the rise.

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