Services activity confirms recovery

6 January 2004
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06 January 2004 | Gareth Mytton

Services companies in the UK confirmed the sector's post-war and Sars recovery in December, according to the latest PMI report.

The business activity index, produced by CIPS and NTC Research, stood at 58.5 - seasonally adjusted for the Christmas holidays - well above the 50 figure that indicates no change on the previous month.

More than 25 per cent of companies said activity rose in December, compared with 8.7 per cent reporting a fall.

The incoming new business/new orders index was 59, as improved business climates at home and abroad, greater client optimism, increased marketing and new product launches helped to swell order books. This also led to some companies being unable to clear backlogs (51.5), despite another rise in employment (51.9).

Only 5.3 per cent of companies were able to pass higher input costs (55.6) on to customers. The rise was blamed on labour costs, imports from the euro-zone and utility prices.

UK businesses are still confident about prospects for 12 months' time, as 63 per cent expect activity to have risen.

The euro-zone also recorded significant growth in December, according to NTC Research. The services sector business activity index eased to 56.6 after five months in which growth accelerated.

There was slower growth in the US non-manufacturing industries as well in December. The Institute for Supply Management's (ISM) report put the PMI at 58.6, a marginal fall on November's 60.1. Twelve industries said activity had increased, one reported no change and four reported a fall.

* 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.

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