Service-sector revival signs are taken with a pinch of salt

The services sector, the largest part of the British economy, is pulling the country out of recession, latest figures reveal.

But a debate is raging in the City about the statistics from the Chartered Institute of Purchasing & Supply, with economists warning they could be inaccurately painting a dangerously rosy picture of the state of the nation.

The latest index collated from the responses to the monthly CIPS survey of purchasing managers in the services sector gave a reading of 56.6. Any figure over 50 indicates growth in the sector, and the healthiness of the November reading was tempered by the fact it was down on October's of 56.9.

The data found new business is expanding at its fastest rate in more than two years, business expectations are running close to two-year highs and the rate of service-sector job losses is slowing.

However, the figures are not official, and economists are questioning their veracity. The numbers have become controversial because in the third quarter they indicated sound growth when official data revealed economy remains in recession.

"This is prima facie another buoyant services survey," said Ross Walker at the Royal Bank of Scotland. "But there remains a distinct sense that the survey is exaggerating the extent of the pick-up in actual services output growth."