Services show a return to growth

The corrugated economy continues.

The third of the UK PMIs has come in today (After construction fell and manufacturing rose), and the service sector is also seeing a return to growth, with the index recording a level of 51.5 (where 50 is equal to no change).

Markit economics, which produces the index, writes:

A return to growth of the UK service sector was signalled at the start of 2013 as volumes of incoming new business increased and companies boosted capacity by adding to their payrolls.

Confidence in the future also strengthened, reaching an eight-month high, but margins continued to be squeezed as output charges rose at a considerably slower rate than input costs.

Combined with the other PMIs, the picture remains far from rosy, but at least the UK appears to be stagnating rather than actively shrinking. It fits with the view of the economy becoming corrugated — flipping from mild growth to mild contraction with the overriding trend being stagnating. The all-sectors PMI, which aggregates the information in the previous releases, ought to confirm that tomorrow.

With services the most important sector of the UK economy — for better or worse — the return to growth is a "huge sigh of relief" according to Markit's chief economist Chris Williamson:

Stronger growth would inevitably have been recorded had the country not suffered the heavy snowfall, suggesting the underlying trend is even stronger than these numbers indicate.

With services companies’ confidence also picking up, new business rising for the first time in three months and hiring growing at the fastest rate for six months, the sector looks to be on a renewed upswing which should help the economy grow again in the first quarter.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Jeremy Corbyn secures big victory on Labour's national executive committee

The NEC has approved rule changes which all-but-guarantee the presence of a Corbynite candidate on the ballot. 

Jeremy Corbyn has secured a major victory after Labour’s ruling executive voted approve a series of rule changes, including lowering the parliamentary threshold for nominating a leader of the Labour party from 15 per cent to 10 per cent. That means that in the event of a leadership election occurring before March 2019, the number of MPs and MEPs required to support a candidate’s bid would drop to 28. After March 2019, there will no longer be any Labour MEPs and the threshold would therefore drop to 26.

As far as the balance of power within the Labour Party goes, it is a further example of Corbyn’s transformed position after the electoral advance of June 2017. In practice, the 28 MP and MEP threshold is marginally easier to clear for the left than the lower threshold post-March 2019, as the party’s European contingent is slightly to the left of its Westminster counterpart. However, either number should be easily within the grasp of a Corbynite successor.

In addition, a review of the party’s democratic structures, likely to recommend a sweeping increase in the power of Labour activists, has been approved by the NEC, and both trade unions and ordinary members will be granted additional seats on the committee. Although the plans face ratification at conference, it is highly likely they will pass.

Participants described the meeting as a largely low-key affair, though Peter Willsman, a Corbynite, turned heads by saying that some of the party’s MPs “deserve to be attacked”. Willsman, a longtime representative of the membership, is usually a combative presence on the party’s executive, with one fellow Corbynite referring to him as an “embarrassment and a bore”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.