UK service sector gives boost to the economy

(As stated on Sky news website) 

Britain's powerhouse services sector picked up pace in December, dampening fears that the economy is heading back to recession.

The Purchasing Manager's Index showed activity in financial services, hotels, restaurants, hairdressers, transport and communications, grew at its fastest pace since July.The figures highlight estimated GDP growth of up to 0.4% in the final quarter of 2011.The December upturn in the sector, which makes up 75% of GDP, surprised economists, who feared a negative fourth quarter given the weak retail sector. It comes on top of better-than-expected performances for the manufacturing and construction sectors in December.

The latest data was released as the pound hit a 16-month high against the euro, suggesting even further that there is still life in the UK economy. But that growth may prove short-lived with the PMI data showing companies are worried about the coming year. Markit economist Chris Williamson said the UK is not in the clear yet with expectations of future business growth slipping to the joint-weakest since March 2009.He added that firms have said they are most anxious about the impact of the euro zone crisis. "Uncertainty remains unusually high, and companies look to be hunkering down for a tough year in 2012," he said. "But the upturn in services activity in December provides some encouraging news that the UK economy is showing some resilience among the many headwinds that it is currently facing."