Service sector expansion 'signals return to economic growth'

The service sector in the UK is expanding once more, figures from the Chartered Institute of Purchasing and Supply showed today.

In August, the index rose from 53.2 to 51.1.

As well as representing positive growth in the sector - with 50 indicating a neutral level - the monthly rise pushes the index to its highest level since 2007.

In common with other sectors of the economy, services have been hit hard by the credit crunch and subsequent recession.

However, the return to expansion suggests that the economic downturn in the UK could be coming to an end.

Commenting on the new figures, Paul Smith, senior economist at Markit Economics said: ’The latest services data leave the UK economy on track for growth in the third quarter, although there will remain doubts over the sustainability of expansion.’

The Chartered Institute of Purchasing and Supply’s index is based on a poll of 700 different companies taken each month.

GDP figures from the second quarter show that UK output shrank by 0.8 per cent.ADNFCR-2318-ID-19344378-ADNFCR