BRITAIN is through the worst of the recession, experts claimed yesterday as the service industry showed its first signs of growth for 13 months.
A rise in new business and orders for the all-important industry boosted average levels of activity across the UK's three main business sectors to register its first expansion since March 2008.
Data released yesterday by the Chartered Institute o
f Purchasing and Supply (Cips) revealed growth in the services sector in May, while figures out earlier this week for the construction and manufacturing industries showed a marked improvement in the rate of decline.
Within the services industry, the hotels and IT sub-sectors registered a slight contraction, while all others, including financial services, reported growth.
Roy Ayliffe, director of professional practice at Cips, said: "Together they show solid growth in May, which is fantastic news. On that one month's data, it's end of recession.
"The largest sector – services – has now broken into growth and the average of all three is in positive territory. It went from feast to famine and it is now moving back to a nice square meal."
The report came as a leading economist revealed he is to re-adjust his forecast for the second quarter of the year to reflect the improving conditions.
Howard Archer, chief UK economist for IHS Global Insight, said he predicted the economy would remain fairly flat for the three months to the end of June, slipping by just 0.2 per cent – compared with a drop of 1.9 per cent in the first quarter.
He said: "The worst is definitely over in terms of the lows of contraction during the recession. I do not see a return to plunging depths and I do not think we can rule out experiencing a quarter of GDP growth this year, although I do not expect to see a sustained improvement until next year."
Data released yesterday by Cips showed an average business activity index reading across all three sectors of 50.1 in May – just above the no-change level of 50. A number less than 50 signifies contraction in the industry.
The last time the average figure was in positive territory was in March 2008, when it registered 51.4.
The services sector – which makes up 60 per cent of the UK economy – yesterday heralded its first return to growth in 13 months, registering 51.7 on the index.
Mr Ayliffe said Britain's economy had been boosted by a relaxation of bank lending, stimulating consumer spending and the availability of mortgages.
But others claimed it was too early to signal an end to the downturn, pointing to ongoing price discounting and historically steep job-shedding.
Earlier this week, Cips reported a slight contraction in the construction and manufacturing industries, but at a significantly slower pace.
Property prices on rise in capital for the third month in a rowHOUSE prices in Scotland's capital are continuing to rise, according to the latest report by the Edinburgh Solicitors Property Centre.
The average house price in the city currently stands at £206,138, having risen for the third consecutive month. Although prices are still well below last year's average, it is widely agreed the rise could signal a revival of the capital's property market.
Despite rapidly rising unemployment across Scotland, estate agents have reported an increase in sales of mid-price properties needing little or no refurbishment, bungalows and student flats, and have noted the highest rate of properties changing hands since October.
There were 372 sales completed last month, compared with 331 in April. However, sales remain 45 per cent down annually.
Last autumn, when the extent of the financial crisis was emerging, average sales plunged dramatically to just 4.5 a day. ESPC chief executive Ron Smith said the market was showing "clear signs of improvement".
However, Mr Smith also advised caution before regarding this as evidence of being out of the slump.
He said: "This improvement is coming from historically low levels of activity in Edinburgh's housing market.
"With that said, an increasing number of sellers setting realistic asking prices are finding buyers willing to meet their expectations."
