Service industry input costs hit record high

2 April 2008
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03 April 2008 | Jake Kanter

Activity in the services industry continued to grow last month, but at a slower rate than in February.

According to the latest CIPS/NTC report on services, where a figure above 50 represents growth, the sector recorded 52.1 in March. It signalled a slight slowdown compared with February's figure of 54. Activity has now remained above 50 for five years.

New orders recorded 53.4 last month, a slight drop from 54.6 in February. Although still strong, slower decision-making due to difficult economic conditions contributed to the fall in orders.

Input costs hit a record high in March, reaching 66.2, compared with 65.6 the month before. The record global price of oil pushed up the cost of both energy and fuel.

Despite high inputs, prices charged by providers slowed from February's figure of 56.8, reaching 56.2 in March. The report said companies are still trying to pass on high input costs to clients.

The culmination of these factors is affecting the industry's profitability. Although it increased compared with February's figure, it remained below the 50 mark, recording 47.8 in March.

* Further information on PMI reports is available at http://www.supplymanagement.com/pmi





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