UK economy in good shape, service segment survey adds more impetus

UK CIPS/Markit report on services will likely to dispel the potential fears over renewed UK's economic slowdown following the deterioration in the manufacturing and construction surveys already released.

The survey's main activity balance rose against expectations of a fall although in line with our forecast from 58.9 in March to 59.5.

And the futuristic balances such as business expectations, employment and new orders) softened a touch, all remained at high levels. Accordingly, while the weighted average of the three surveys has still nudged down. It remains consistent with economic growth picking back up sharply after the first quarter's weak 0.3% quarterly rise in GDP. On the basis of their past track records, the surveys point to quarterly GDP growth of about 0.8%.

Accordingly, it does not look as though uncertainty about the general election's result has knocked the economic recovery off course. That said, the recovery is clearly not very well-balanced across different parts of the economy, with growth still heavily reliant on the consumer and services sectors.

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