03 December 2003 | Gareth Mytton
Activity in the UK services sector grew in November at the fastest rate since June 1997, according to the latest PMI reports.
Several companies said the cause was the improved business climate since the end of major hostilities in Iraq, as the CIPS/Reuters business activity index rose to 59.6, well above the 50 figure that indicates no change on the previous month.
Companies were also encouraged to launch new products and step up their marketing campaigns, which helped 27 per cent of businesses to increase their activity in November.
The new orders index climbed to 60.1, the fastest rise since May 1997. Financial intermediation companies reported a particularly big jump in new business.
Companies took on more staff (51.4), although the rise was modest. They were also able to raise prices owing to stronger demand. Some financial intermediation companies increased their charges in line with the recent rise in base rates.
The increased minimum wage led to higher labour costs, pushing the input prices index up to 56.3. Some transport and communication firms added that fuel price rises had increased operating costs.
In the euro-zone, NTC Research said that the business activity index had risen to 57.5, the highest figure since October 2000. The growth was strongest in France, followed by Italy and Spain.
And in the US, the Institute for Supply Management (ISM) reported that November's business activity index was up to 60.1. Thirteen industry sectors recorded expansion, including agriculture and entertainment, and only two said activity had dropped.
* More information on the UK and euro-zone PMIs is available at www.ntc-research.com
. The full text of the ISM reports on the US economy for November, and previous reports, is available at http://www.ism.ws/ISMReport/index.cfm.