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Improved Service Sector data boosts UK recovery hopes

Improved Service Sector data boosts UK recovery hopes

George Osborne received a much-needed boost yesterday after figures showed the recession may finally be coming to an end. A strong rebound in the dominant services sector – the mainstay of the economy – suggested the UK is on the verge of recovering from the longest double-dip recession. It will be a tonic to the beleaguered Chancellor who survived David Cameron’s first Cabinet reshuffle but has seen his popularity sink to new lows.

Activity among the UK’s banks, hauliers, accountants and other services industries that make up three-quarters of the UK economy increased by more than expected in August and produced the strongest performance in five months. The Purchasing Managers Index registered 53.7, up from July’s figure of 51 – anything over 50 denotes growth and versus Augusts’ reading of 51. This surprising strength of services offset the declines in both manufacturing and construction in August, delivering a welcome boost to confidence and reducing the prospect of an interest-rate cut or quantitative easing from Bank of England tomorrow.

The euro has dipped against the dollar as investors are trading cautiously ahead of a European Central Bank meeting and a U.S. jobs report. Sterling has gained against euro and trading at a range of 1.2620 -1.2670.

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