20 June 2002 | Robin Parker
Business activity in the UK services sector grew at its fastest pace for 15 months in May, according to the latest indicators.
The purchasing managers' index for the sector, from CIPS and NTC Research, grew 2.2 points to 56.7, ahead of the 50 mark that indicates no change on the previous month.
More than a quarter of companies reported that new orders rose on April, underpinned by improved business and consumer confidence.
Strong sales in the retail sector continued to boost the figures, backed by robust take-up of business-to-business services.
Several purchasing managers said they were starting to see the revival of spending on projects delayed by 11 September.
Purchasers remain confident of business growth, with about 60 per cent of firms expecting activity levels to rise this year.
Some of these said new business development programmes, product launches and acquisitions of other firms had demanded higher activity.
A Confederation of British Industry (CBI) survey also found strong optimism among business and professional services, where sales rose for the first time this year.
But it warned that falling sales in consumer services such as hotels and private healthcare were holding back a full recovery.
Ian McCafferty, chief economic adviser to the CBI, said the survey stressed the divide between business-to-business and business-to-consumer services.
"The recovery is still fragile but it is starting to boost business-to-business services," he said.
"Consumer services firms are more negative about present and future business - demand has been for retail goods rather than services, which have also been hit by the downturn in tourism."