U.K. Services Grow Fastest in 14 Months on Olympics, Auto Sales

Britain’s services expanded at their fastest pace for more than a year in July, adding to evidence that the economy returned to growth in the third quarter.

Services, which account for about three quarters of the economy, rose 1.1 from June, when the sector fell 1.5 percent, the Office for National Statistics said in London today. It was the biggest increase since May 2011.

The figures show the industry rebounded after activity was hampered in June by an extra public holiday for the Queen’s Diamond Jubilee. Output rose across the sector, with a jump in auto sales driving a 1.8 percent gain in distribution, hotels and restaurants. There was also a boost from Olympic ticket sales.

“This will leave the level of activity back to roughly where it was in May, suggesting pretty much no underlying growth in the service sector,” Phil Rush, an economist at Nomura International Plc in London, said before the data was released.

The figures come after data yesterday showed the economy shrank less than previously thought in the second quarter and personal incomes rose at the fastest pace for three years.

Olympic ticket sales boosted the arts and recreation sector, which gained 3.7 percent from June, the statistics office said.

In a separate release today, the statistics office said output per worker fell 1.3 percent in the second quarter from the first. Unit wage costs, or the amount spent on wages and salaries to produce each unit of output, rose 2 percent. Market sector productivity fell 1.5 percent to its lowest level since 2005.

The ONS also said Northern Rock Asset Management and Bradford and Bingley PLC had been reclassified as central government bodies, as of January and July 2010 respectively. The change has increased U.K. general gross government debt and lowered the deficit.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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