By David Milliken
LONDON Dec 5 Businesses in Britain's services
sector grew at their fastest pace since January last month, a
survey showed on Monday, and the broader economy kept up its
momentum in late 2016, even if firms have some worries about the
The Markit/CIPS services purchasing managers' index (PMI) -
a closely watched gauge of the services sector - rose to 55.2 in
November from 54.5 in October, beating all the forecasts in a
Reuters poll of economists.
Despite a dip in the equivalent survey of manufacturers
published last week, overall the November PMIs suggest the
economy as a whole will maintain the third quarter's solid 0.5
percent growth rate through to the end of the year, Markit said.
"The pace of UK economic growth remains resiliently robust
in the fourth quarter, despite ongoing uncertainty caused by
Brexit," said Chris Williamson, chief business economist at IHS
Markit, the company that compiles the survey.
Most economists and the Bank of England said Britain's
economy would slow sharply after June's vote to leave the EU.
But strong consumer demand and a boost to exporters from the
heavy post-referendum fall in sterling have kept growth going.
A separate survey by manufacturing lobby EEF released
earlier on Monday showed a boost in new orders and a
better-than-expected recovery in output.
Last month the Bank of England revised up its forecasts to
pencil in 0.4 percent growth for the last three months of 2016.
But it also said annual growth would slow to 1.4 percent next
year from 2.2 percent in 2016 as higher inflation squeezes
Businesses are already starting to feel the pinch of
costlier imports due to the fall in sterling, and Markit said
business costs had risen by the most in five-and-a-half years
during the past two months.
"These higher costs will inevitably feed through to
consumers in the form of higher prices," Williamson said.
The BoE forecasts inflation will surge to 2.7 percent next
year from 0.9 percent in the most recent data, and many
private-sector economists think it could rise even faster.
However, very few expect the BoE to reverse August's rate
cut in response. On Friday the central bank's chief economist,
Andy Haldane, warned against hasty action. BoE Governor Mark
Carney will speak on the economy later on Monday.
Services businesses taking part in the PMI reported a
positive outlook overall as the weak pound boosted foreign
orders. They also expected domestic demand to remain resilient.
However, optimism fell to the lowest since just after June's
referendum and the second-lowest in four years.
"Anecdotal evidence highlighted ongoing uncertainty among
service providers linked to Brexit, the value of sterling and
the unexpected result of the U.S. presidential election," Markit
(Reporting by David Milliken; Editing by Toby Chopra)