Services sector still at forefront of economic recovery

6 January 2010

6 January 2010 | Jake Kanter

Activity in the UK services sector maintained stability last month as levels of new work continued to rise.

According to the latest CIPS/Markit Services Purchasing Managers’ Index – where a figure above 50 represents growth – the industry recorded 56.8 in December, slightly up on the 56.6 registered the month before.

Levels of new business remained strong, growing at the fastest rate since September 2007 to reach 57 last month. This was a marginal increase on the 56.8 posted in November.

Service suppliers’ amount of outstanding business improved slightly on the previous month, but remained in overall decline. Staff numbers have now contracted for 20 consecutive months, while future business expectations remain high.

CIPS chief executive David Noble said the services industry was “heralding the way for wider economic growth”, but said the troubles of the economic downturn are still close to hand.

“Though largely positive, a scratch of the surface reveals some challenges. On a more immediate level, fierce competition is preventing firms from offsetting input cost hikes on to customers and increases in work haven’t prevented firms from shedding jobs again, despite murmurs of staff being overstretched,” he said.

In the rest of Europe, the services sector also continued to recover. The Eurozone Services Business Activity Index posted 53.6 in December, up from 53 the month before.

Further coverage of PMI reports is available here.

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