Hotels and restaurants lead services growth

2 June 2004
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03 June 2004 | Gareth Mytton

Hotels and restaurants enjoyed the strongest growth in the UK services sector in May, as sector-wide business activity maintained its recent expansion.

The services sector business activity index - a composite indicator of business conditions from CIPS and NTC Research - stood at 57.4, a fall on April's 59 but still well above the 50 figure that indicates no change on the previous month.

More than a quarter of services companies again said activity had risen in May, led by hotels and restaurants - owing to seasonal demand - and business-to-business services.

The sector was also blighted by a big rise in input prices, at 61.5, caused by rising labour costs, raw materials (steel and paper in particular) and, for transport companies, fuel charges.

Although the new orders index slipped to 58.2 from 60.5, nearly 28 per cent of companies said orders were up. They also took on more staff, generally to cope with current demand and anticipated business.

Activity was also up in the euro-zone on the previous month, according to NTC Research. The service sector business activity index rose to 55.8 in May.

Meanwhile, in the US, entertainment companies said trade was down in May compared with April, but 15 industry groups reported growth. The Institute for Supply Management put its PMI at 65.2, a fall on April's 68.4.

* 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 May, and previous reports, is available at http://www.ism.ws/ISMReport/index.cfm.

SMjun2004

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