New business drives rapid services expansion

2 October 2003
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03 October 2003 | Gareth Mytton

Business was up for a quarter of all UK private-sector services companies in September, according to the latest PMI report, as all three sectors of the economy grew for the third successive month.

The purchasing managers' index - a composite indicator of business conditions compiled by CIPS and NTC Research - put the business activity index at 58.7, up from 57 in August, and the highest figure since August 2000.

The increase reflected another strong rise in new business (58.6), the biggest climb since August 1999. More than 30 per cent said new orders were higher, and they have now risen for five months in a row.

Companies in the survey attributed the rise to resurgent markets and a greater willingness of existing clients to place new orders.

Employment and backlogs both grew marginally. Jobs rose to meet new and anticipated orders. Outstanding work rose mainly in the transport & storage, and personal services, sectors.

A small number of companies managed to raise prices (50.1) owing to growing demand, but strong competition prevented most from following suit.

Input price inflation slowed, at 54.7, but higher labour costs, supplier prices and utility costs, along with the euro's strength against the pound, were all frequently mentioned.

Nearly 60 per cent of businesses expected activity to be higher in a year's time. IT companies were the most optimistic, and business services firms were the most pessimistic.

There was further good news from the euro-zone, where the nascent recovery gathered pace. The business activity index rose to 53.6, as all of the big four economies reported increases in services activity.

The rise was supported by increasing new orders (53.6), which grew at the fastest rate since September 2001.

SMoct2003

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