The U.K. service sector expanded at its fastest pace for over six-and-a-half years in July, helped by an increase in new business as market conditions continued to strengthen, results of a closely watched survey revealed Monday.
The headline Business Activity Index climbed to 60.2, the highest reading since December 2006, from 56.9 in June, Markit Economics said. The reading was forecast to rise moderately to 57.3.
Above-50.0 readings have now been recorded for seven months in a row, with growth accelerating continuously throughout this period.
Underlying demand was stronger as market conditions improved both at home and abroad. Good weather and pick-up in the housing market boosted activity and sales, the survey said.
A strong growth in new business led to capacity pressures, as highlighted by the sharpest rise in backlogs of work since February 2000.
Backlogs have now risen for four months in a row, which in turn encouraged a further rise in employment. July's survey marked the seventh successive month when payroll numbers have increased.
On the cost front, input price inflation was little changed at a marked pace in July. At the same time, service providers were able to pass on a proportion of their higher input costs to clients.
"Although an early call on one month's data, the forward-looking elements from the survey point to a further strengthening of GDP in third quarter as the U.K. heads towards 'escape velocity' and self-sustaining economic expansion," Paul Smith, senior economist at survey compilers Markit said.
Earlier in the day, manufacturers' group EEF upgraded their forecasts for U.K. economic growth this year to 1.1 percent from 0.9 percent. But, it warned of significant risks should investment fail to make up ground lost in the last five years.
Nevertheless, IHS Global Insight's Chief U.K. Economist Howard Archer said there are still significant headwinds to growth which suggest that the economy will struggle to sustain its current rate of growth for an extended period.
The Bank of England will release its next quarterly GDP and inflation outlook on August 7.
For comments and feedback contact: editorial@rttnews.com
Economic News
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.
May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.