By Daniel Hunter

Jeremy Cook, chief economist at the currency firm World First, has said that today's (Monday) sector data is further evidence that the economy is well and truly on the path to sustained growth.

The sector expanded at its quickest pace for over six-and-a-half years in July as new business continued to rise strongly amid evidence of an improvement in market conditions. The strong gain in new work placed pressure on capacity, leading to a marked increase in backlogs of work and encouraged solid payroll growth.

“The good news just keeps on coming for the UK economy and, yet again, we have had all three PMIs for the month (manufacturing, construction and services) come in at multi-year highs," Cook said.

“The key to this, and the sustainability of the recovery, is the confidence around the employment components of these surveys - jobs will only be added if these levels of growth are sustained. Wages should also increase along the way as well further improving confidence and lessening the gap between wage settlements and price rises.

“Although the improvement in the weather has helped things, I do worry about sales being dragged forward from months in the future. There could be a potential ‘deflating of the balloon’ as we move through the rest of the year, and when consumers begin to save cash for the inevitable Christmas splurge.

“Nevertheless, combined with the great manufacturing and construction numbers we saw last week, the picture for the UK economy through Q3 is looking encouraging.

“Whether the speed of growth constitutes ‘escape velocity’, as yet to be detailed by the Bank of England, remains to be seen. For GBP bulls, the hope is that these figures cause the MPC to reduce the threat to sterling from increased QE or aggressive forward guidance.”

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