Services companies feed on order growth

6 January 2005
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06 January 2005 | Gareth Mytton

New business was the main factor behind the twenty-first consecutive month of growth for UK services companies, according to December's 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 of 50 indicates no change on the previous month, eased to 54.9, from 56.7 in November.

The strongest-growing sectors were hotels & restaurants, along with transport and storage. However, the business services and personal services categories recorded slight falls in activity.

The new orders index fell to 55.4, the lowest since September. Services firms took on more staff (51.8) in response. Investment in products and more advertising helped to secure new business, but some companies said clients had deferred decisions on spending.

Input price inflation eased from the 60-plus figures of recent months, to 59.9, partly owing to a fall in oil prices. Only 8.1 per cent of companies managed to pass on these higher input costs.

In the euro-zone, the NTC Research services sector business activity index stayed at 52.6. For the third month in a row, France enjoyed the fastest growth in activity.

Growth in new orders accelerated for the first time in six months.

In the US, the Institute for Supply Management (ISM) report on non-manufacturing business reported another rise in the PMI. It stood at 63.1, up from 61.3 in November.

• 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 December and previous months is available at http://www.ism.ws/ISMReport/index.cfm.

SMjan2005

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