03 July 2009 | Jake Kanter
Activity in the services sector increased for the second month in a row as companies caught up on backlogs of work.
According to the latest CIPS/Markit UK Services Purchasing Managers' Index, where a figure above represents growth, the industry recorded 51.6 in June. The rate of growth was slightly slower than in May, when total activity posted 51.7.
This was a substantial improvement on June last year, when the industry contracted to 47.1.
Employment in the services sector contracted for the fourteenth month in a row, as staff levels fell from 43.7 in May to 42.9 last month. Company restructuring led to severe job cuts and leavers were not replaced.
New business levels also fell back into decline after posting growth in May and input prices continued to rise.
Despite these factors, business expectations remained extremely positive, growing for the seventh month in succession.
CIPS chief executive David Noble said it was too early to say if the services sector had started a "full blown recovery".
"With many consumers' purses staying firmly shut, those that rely most on consumer spending, such as hotels and restaurants, are really feeling the pressure," he said.
* Further coverage of PMI reports is available at http://www.supplymanagement.com/pmi