Heat wave brings good times for UK services

2 September 2003
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03 September 2003 | Gareth Mytton

The UK services sector enjoyed another boom month in the August heat wave, according to new PMI figures, as activity grew at the fastest rate since January 2001.

The headline business activity index, published by CIPS and NTC Research, rose to 57, up from 56.1 in July and well above the 50 figure that indicates no change on the previous month.

Just under 20 per cent of companies said new orders had risen amid increasing client confidence. Marketing also attracted new business, and a number of panel members said the booming housing market had increased their trade.

The personal services sector, along with hotels and restaurants, enjoyed the biggest growths in activity, thanks partly to the August heat wave.

Order books swelled as the new orders index rose to 57.5.

For the first time in more than a year, backlogs increased. To meet demand, employment rose for the first month in nearly two years, but a number of companies said supply delays hindered their efforts.

Competition stopped the majority of firms from raising their prices, as the average prices charged index fell to 51.2.

However, input prices rose at 55.6, with higher labour costs, rents and supplier prices taking most of the blame. A number of transport and communications companies said increases in fuel prices had made inputs more expensive.

Hopes of a global recovery, as well as new marketing drives, made businesses optimistic about their prospects for the next 12 months.

SMsep2003

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