Service sector activity still in decline

2 September 2008
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03 September 2008 | Paul Snell

Activity in the UK service sector declined for the fourth successive month in August.

According to the latest CIPS Purchasing Managers' Index (PMI), where a figure below 50 represents contraction, activity in the sector fell to 49.2 last month. But this was a slower rate of decline compared to the figure of 47.4 the index recorded in July.

Continued contraction was blamed on the difficult and uncertain economic climate. These conditions meant new business also remained below the 50-mark, but improved from 44.7 in July to 47.1 in August. Firms said winning new contracts was difficult and there was evidence that decision-making was delayed because of uncertain conditions.

As a result, companies continued to shed jobs and the employment index was below 50 for the fourth consecutive month recording 47.9 in August. The hotels and restaurant sector was the most affected by job losses.

There was slight relief for buyers in two areas of the survey. Input prices were at a five-month low, recording 66.8 last month. Optimism for the future also picked up, from 56.1 in July to 61 in August, with businesses citing new product launches, marketing and organic growth as factors that would boost activity.

Further coverage of PMI reports is available at


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