UK service sector grows at fastest pace since 2013 in April - PMI

The City of London financial district can be seen as people walk along the south side of the River Thames, amid the coronavirus disease (COVID-19) outbreak in London, Britain, March 19, 2021. REUTERS/Henry Nicholls

LONDON, May 6 (Reuters) - Britain's services sector recorded its fastest growth in more than seven years last month as hospitality businesses and retailers began to reopen to the public after months of lockdown.

IHS Markit said its monthly Purchasing Managers' Index for the services sector rose to 61.0 in April from 56.3 in March, above an earlier flash estimate of 60.1.

Both the services PMI and a composite PMI which includes the smaller manufacturing sector were the highest since October 2013. New orders rose at the fastest pace since December 2013.

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"A surge of pent-up demand has started to flow through the UK economy following the loosening of pandemic restrictions," IHS Markit economics director Tim Moore said.

The Bank of England is expected to revise up its growth forecasts for 2021 later on Thursday, reflecting the rapid roll-out of COVID vaccines in Britain and a very sharp drop in the number of new deaths and infections from the disease.

Non-essential retailers reopened to in-store shoppers across Britain last month and pubs and restaurants were allowed to serve customers seated outside.

Indoor dining is expected to be allowed to resume in England on May 17 and Prime Minister Boris Johnson's government aims to remove most social distancing rules by late June.

"The roadmap for reopening leisure, hospitality and other customer-facing activities resulted in a sharp increase in forward bookings and new project starts across the service sector," Moore said.

Britain's economy suffered its biggest fall in output in more than 300 years in 2020 with a contraction of nearly 10% - bigger than most other advanced economies - and may take until early 2022 to recover to its pre-pandemic size.

Rapid growth - and ongoing global disruptions from COVID-19 and Brexit - is also creating inflation pressures.

The PMI showed the biggest rise in costs for businesses since February 2017 and the strongest hiring in more than five years, creating staff shortages for the first time since the start of the pandemic.

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Reporting by David Milliken; Editing by Hugh Lawson

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