Chris Williamson at Markit, which ran the surveys, says these results are consistent with real GDP growing by more than 1 per cent in the fourth quarter. With the surveys showing rising orders and falling inventories, economists expect the expansion to carry on for a few more months, at least.
But because unemployment is unlikely to fall below the Bank of England's threshold of 7 per cent until later next year, economists don't expect the upswing to cause an early rise in interest rates. This combination of growth and easy money could drive share prices higher. Trevor Greetham at Fidelity Worldwide Investments says: "We expect the strong growth trend to continue. It supports a positive view on sterling and on the more domestically-focused mid-cap sector of the UK stock market."
There are, however, reasons for caution. The British Retail Consortium reported this week that retail sales rose by 2.3 per cent in the year to November, a slightly slower pace than in the last 12 months. This suggests that consumer spending - which contributed more than half of the 0.8 per cent GDP growth in the third quarter - might be faltering under the weight of continued falling real wages.
It's not yet clear whether other sectors of the economy can pick up this slack. Although purchasing managers surveys show that export orders are rising even from the euro area, this is not yet showing up in official figures. These are expected to show next week that the UK's trade deficit is close to a record high, with exports falling even to non-European Union countries.
There are also concerns about business investment. Bank of England figures show that bank lending to non-financial firms and to smaller businesses fell in October. "Businesses remain reluctant to borrow," says Phil Orford of the Forum of Private Business.
Carl Astorri of Ernst and Young's Item Club says: "For the recovery to be sustained, exports and business investment need to play a bigger role in growth."
