Published: Sat, January 13, 2018
Markets | By Rosalie Gross

British pound gains a little ground on positive United Kingdom services PMI rise

British pound gains a little ground on positive United Kingdom services PMI rise

The eurozone economy continued to gather momentum in December as growth in service sector activity rose at its quickest pace in almost seven years.

The update comes as output in the United Kingdom manufacturing industry achieved "solid growth" last month, but eased back from a near four-and-a-half-year high when separate PMI data was released on Tuesday.

Jobs growth quickened to the fastest since September and stronger than the series trend.

Markit's final composite Purchasing Managers' Index (PMI), which tracks the activity in manufacturing and services that together account for more than two-thirds of the economy, roseto 58.9 from 57.3 in November to reach an 80-month high.

Survey respondents indicated that house building remained a key engine of growth, with residential work expanding for the sixteenth consecutive month in December.

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Pacing gains on the latter was stock in Fiat Chrysler and Ubi Banca, with the former apparently boosted by the outlook for sales on the other side of the Pond thanks to recently approved tax cuts. The upturn in outstanding business accelerated and was the quickest since October 2015.

Greater production requirements also impacted purchasing activity which increased at the fastest pace since February. Panellists linked rises to higher raw material prices, which partly stemmed from supplier delays.

"Meanwhile, manufacturers raised their staffing levels during December".

"December saw a welcome upturn in service sector activity, highlighting the continued resilience of the economy as 2017 came to an end", said Chris Williamson, IHS Markit's chief business economist. The upbeat mood is underscored by an increased appetite to hire new staff, with the survey indicating that factory payroll numbers are rising at a rate not seen for over three years.

"We expect the recovery in the manufacturing sector to lose its current vitality soon", said Samuel Tombs, an economist with consultancy Pantheon Macroeconomics.

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