UK Economy Heads Towards Escape Velocity

Following last week's jump in the UK's construction PMI, there is further good economic news.

The UK services sector grew at its fastest pace in more than six years in July. The Markit/CIPS services purchasing managers' index (PMI) rose to 60.2 in July from 56.9 in June, its highest level since December 2006. This is a larger gain than forecast by any of the economists polled by Reuters.

Paul Smith, senior economist at Markit is quoted by Reuters:

"Although an early call on one month's data, the forward-looking elements from the survey point to a further strengthening of GDP in Q3 as the UK heads towards 'escape velocity' and self-sustaining economic expansion."

The PMI survey showed a continued increase in services employment. However, the increase in demand is also causing firms to increase prices; ie people's incomes will remain "under pressure".