Sharp rise in service sector input prices

4 January 2008
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04 January 2008 | Paul Snell

The growth of input prices in the service sector has equalled its fastest rate since August 2006.

According to the latest CIPS/NTC Purchasing Managers' Index, where a figure above 50 represents growth, prices reached 63.9 in December. This equals the level of growth recorded in August 2006, which was the highest rate in the report's eleven-and-a-half year history. Buyers blamed higher wages, increased energy costs, and costs passed on by suppliers for the rapid rise.

Activity in the services sector continued to grow, however, recording 52.4 in December. This was a faster rate of growth than in November, which registered 51.9. However, levels of activity remained in a trough compared with high figures from earlier in the year.

Optimism for the sector in 2008 also continued to develop at a slower rate. Future expectations recorded 67.5 in December, compared with 69.6 in the previous month. This was the lowest rate since November 2001, and was attributed to the credit crunch and worsening economic conditions.

New orders also continued to grow, at a slightly faster rate than in November, reaching 52.5, up from 52.3. Employment was also just up on the previous month, recording 52, compared with 51.9 in November.

* Further coverage of PMI reports is available at http://www.supplymanagement.com/pmi



SMjan2008

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