A survey has shown that UK service sector activity unexpectedly recorded its fastest pace of growth in more than a year in March.
The Markit/CIPS services PMI index, a measure of activity growth as reported by purchasing managers, surged to a 13-month high of 57.1 in March from 52.6 in February, beating even the most optimistic analyst's forecast.
There is a question mark over the sustainability of the increase, however, as some firms reported benefiting from a spurt of public spending in March, the end of the last financial year before big government spending cuts begin in earnest.
The 4.5 point rise in the index is the second-biggest increase since the survey started in 1996, and was only exceeded in January this year, when activity rebounded strongly after contracting due to December's unusually heavy snow.
Data company Markit said that based on March's figures it estimates that British GDP grew 0.8% in the first quarter of the year. The strength of first-quarter GDP is seen by most economists as the key to whether the Bank of England raises interest rates in May from a record low of 0.5%.
Markit economist Paul Smith said it was unclear whether March's data was a blip or marked the resumption of solid growth in the services sector, which must grapple with weak consumer sentiment and public spending cuts.
Its survey's new business index rose to 55.6 from 53.4, its highest level since March 2010. The amount of outstanding business increased for the first time since September 2007, and firms hired more people for the first time since June last year.
The Markit/CIPS survey does not include state-provided services or the beleaguered retail sector, and so accounts for about 40% of GDP compared to around 75% for the service sector as a whole.
Personal services, such as hairdressers, were the fastest growing segment. But more of the index rise was driven by the business services component, which includes firms that rent machinery, conduct research and development or otherwise benefit from growth in Britain's export-led manufacturing industry.
