Services sector hit by poor weather

3 February 2010

3 February 2010 | Jake Kanter

Growth in UK services activity slowed after being disrupted by adverse weather conditions last month, according to the latest CIPS/Markit Services Purchasing Managers’ Index.

The industry recorded 54.5 in January, a weaker performance than the 56.8 registered the month before (a figure above 50 represents growth). The drop was blamed on snow and ice in the UK.

Levels of new business were 57 in December but only 53.4 last month. Despite a lower level of activity in January, growth in the sub-sector has been maintained for seven consecutive months.

Staff numbers continued to decline, but at a slightly slower rate than in December, while backlogs of work also remained in contraction. 
Input prices and prices charged both increased last month, reflecting the higher rate of VAT.

CIPS chief executive David Noble said: “This is a slightly downbeat start to the year for the services sector. This may be a temporary blip caused by one-off events rather than signs of a double-dip recession, but we can't dismiss the possibility.

“The chaos caused by the snow hit this sector particularly hard, much more than manufacturing or construction, reducing the growth rates of activity and new business wins.”

Growth in the Eurozone Services Business Activity Index was also slightly weaker – it was 53.6 in December and 52.5 last month.

Further coverage of PMI reports is available here 


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