Oct. 5 (Bloomberg) -- A U.K. services index unexpectedly rose from an eight-month low in September as new business increased.
The gauge, based on a survey of purchasing managers, climbed to 52.9 from 51.1 in August, Markit Economics and the Chartered Institute of Purchasing and Supply said today in a report in London. Economists had forecast a decline to 50.5, according to the median of 28 estimates in a Bloomberg News survey. A measure above 50 indicates expansion.
Markit said the bounce back in services growth was partly due to a “solid” month of new business growth and a recovery from the impact of riots in August. The report follows a separate Markit survey this week showing manufacturing rebounded in September from a 26-month low as factories depleted backlogs of work at the fastest pace for two years.
“A surprise uplift in growth is welcome news, coming on the back of a similar upturn in manufacturing, but masks the fact that all is not well in the U.K. services economy,” Markit Chief Economist Chris Williamson said in the report. “August had been disrupted by riots” and “many firms also reported that the ongoing expansion was only achieved by eating further into backlogs of work. This is clearly not sustainable.”
Government figures today showed the British economy grew just 0.1 percent in the second quarter, less than the 0.2 percent previously estimated. Nine out of 30 economists in a Bloomberg News survey say the central bank will resume its emergency bond-purchase program tomorrow in an effort to keep the economy growing as Europe’s debt crisis intensifies.
The pound erased losses against the dollar after the report. It was at $1.5470 as of 9:38 a.m. in London, down 0.1 percent on the day.
Services companies reported that the volume of new orders increased for the ninth month in September, while business confidence fell to a 30-month low.
EasyJet Plc, Europe’s second-biggest discount airline, said on Sept. 22 that it will more than quadruple the size of its first-ever dividend payment after predicting record full-year earnings. TUI Travel Plc, Europe’s largest tour operator, said the same day bookings for this winter are “satisfactory” and it’s confident that full-year results will meet its forecasts.
Another Markit survey this week showed construction almost stagnated as the level of new business fell for the first time since February 2010.
A report published by Markit today showed European services and manufacturing contracted more than estimated in September, adding to signs of a deepening slowdown as governments struggle to contain the region’s debt crisis. A composite index based on a survey of purchasing managers in both industries fell to 49.1 in September from 50.7 in the previous month. That is less than an initial estimate of 49.2 published on Sept. 22.
--Editors: Andrew Atkinson
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