Order books rise for services firms

3 November 2004
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03 November 2004 | Gareth Mytton

Almost a quarter of services companies in the UK said new orders rose in October on the month before, in the latest purchasing managers' index (PMI) report.

Exactly 23 per cent of companies enjoyed a faster rise in new business than in September, which lifted the new orders index to 56.4. In the report, compiled by CIPS and NTC Research, an index of 50 indicates no change on the previous month in the report.

The overall services sector business activity index also climbed, to 56.3. Just over a fifth of companies said activity had risen compared with September. Growth was particularly strong in the financial intermediation and transport & communication sectors, although the latter was generally linked to seasonal factors.

The same two categories reported big gains in new business, although the slowdown in mortgage activity dampened growth for financial intermediation companies.

Companies took on more staff (a slight fall to 52.6) for the fifteenth consecutive month, to meet higher workloads and as part of plans for expansion.

But they also suffered the biggest monthly rise in input costs for four years, with the input price index rising to 62.1. Record oil prices, and their knock-on effects on fuel and energy costs, led to higher running costs for 26.5 per cent of companies.

Higher raw materials prices, along with rising labour costs owing mainly to a boost in the minimum wage, were also blamed.

In the euro-zone, the services sector business activity index rose by 0.2 to 53.5 in October after falling in August and September. France enjoyed the fastest growth in activity in output, while in Italy, growth eased to a thirteen-month low.

In the US, the Institute for Supply Management (ISM) report on non-manufacturing business said activity accelerated in October. The business activity/production index rose to 59.8, from 56.7 in September.

Nearly half of US companies in the report said input prices had gone up, with the index at 74.1.

• Coverage of previous months' services, manufacturing and construction PMI reports is available at http://www.supplymanagement.com/pmi.

• 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 non-manufacturing economy for October and previous months is available at http://www.ism.ws/ISMReport/index.cfm.

SMnov2004

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