03 July 2008 | Paul Snell
Activity in the services sector continued to fall in June, reaching its lowest level since October 2001.
According to the latest CIPS/Markit Purchasing Managers' Index for services, the sector recorded a figure of 47.1 last month, below the 50 no-change mark for the second month running. In May the index posted a figure of 49.8.
The fall in activity was attributed to a lack of new orders prompted by economic uncertainty caused by higher costs and tighter credit. The new orders index contracted to 45.1 in June, compared with 48 the previous month. The hospitality sector was particularly affected by a slump in new business.
Input costs also reached a survey high for the fifth successive month, recording 71.7, with the price of oil driving up the cost of fuel and energy.
Expectations for the future were gloomier than ever before. While the index of 59.4 showed expectations of new business are still increasing, it was at its lowest rate in the survey's 12-year history.
Rising costs and lack of work also continued to harm employment. In June staff levels reached 47.6, still declining, but slightly improved compared with 46.5 in May.
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