03 August 2005 | Rebecca Ellinor
Increased capacity and new investment are cited as factors driving improved activity in the UK services industry, according to the latest purchasing managers' index (PMI) report.
The services sector business activity index - a composite indicator of sector conditions from CIPS and NTC Research in which an index above 50 indicates growth - rose to 56.3 from 55.8 in June.
Input price inflation eased again to 56.6 down from 56.9, led, in part, by a fall in steel prices.
Encouraged by rising workloads, firms hired more staff, which resulted in sustained employment growth that has continued for the past two years.
Roy Ayliffe, director of professional practice at CIPS, said: "Overall confidence about the sector's future remained relatively high."
However, he added that concern over the performance of the wider economy caused some businesses to be less optimistic than in the previous month. In particular, the level of confidence in the hotels and restaurants sector was hit by the terror attacks in London.
The services sector in the euro-zone recovered from its slight dip to 53.1 in June to return to its May level of 53.5, according to NTC Research.
Business activity in the non-manufacturing sector in the US increased in July 2005, albeit at a slower rate than June. The Institute for Supply Management's (ISM) non-manufacturing report put the overall index at 60.5, a drop on June's 62.2.
• Coverage of previous months' services, manufacturing and construction PMI reports is available at 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 June and previous months is available at www.ism.ws/ISMReport/index.cfm