Services growth slows in September

4 October 2004
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05 October 2004 | Gareth Mytton

Activity rose again in the UK services sector in September but it was slower than the previous month, according to the latest purchasing managers' index (PMI) report.

Although the growth in activity, at 54.7, was again robust, the percentage of companies reporting a fall in business almost doubled from 5.2 per cent to 10.2 per cent.

Some companies said trade was slower in their markets. This led to weaker rises in new work (which eased for the sixth consecutive month to reach 55.1) and ultimately a slip in the overall index.

They also suffered another sharp rise in input price inflation, at 60.2. Nearly 23 per cent said input prices had risen, with transport companies reporting the largest rises. Fuel, energy, steel, labour and utilities costs were all mentioned.

Customer demand enabled services companies to pass on some of these rises (54.3).

In the euro-zone, the services sector business activity index slipped to a thirteen-month low of 53.3 in September. Italy recorded the quickest growth, even though its index reached the lowest for five months.

The Institute for Supply Management (ISM) recorded slower growth in the US non-manufacturing economy in September. The business activity/production index fell to 56.7 from August's 58.2.

More than a third of US services companies - 35 per cent - reported a rise in business activity, the same proportion that said they were paying higher prices than the month before.

• Coverage of previous months' service, 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 September and previous months is available at http://www.ism.ws/ISMReport/index.cfm.

SMoct2004

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