6 January 2011 | Lindsay Clark
Growth in the services sector fell more than
three points, the latest purchasing managers’ index (PMI) has found.
The Markit/CIPS UK Services PMI shows
activity in the sector during December 2010 fell slightly at 49.7 on the index,
where 50 indicates no change. The PMI registered growth at 53 a month earlier.
the sector as a whole was contracting slightly, buyers were faced with input price inflation accelerating at its
strongest rate since September 2008.
Chris Williamson, chief
economist at Markit,
said: “Bad weather undoubtedly hit service sector business in December, but
there are also clear signs that domestic demand has weakened as households and
business continued to rein in their spending.”
CIPS chief executive David
Noble said: “It was a gloomy end to the year in the UK services sector with
reports of reduced activity, falls in work backlogs, and less new business.
Meanwhile, profits continue to be squeezed as input price inflation accelerated
at its steepest rate in over two years. Fiscal tightening will continue to be a
big theme in the coming year, particularly for companies reliant on the
domestic market such as hotels, caterers and restaurants which also suffered
the most in the winter chill.”
However, it was encouraging to see that business confidence continued to
improve slowly with the promise of stronger economic recovery, Noble said. “We
must hope that there will be spill over from the booming manufacturing sector
which might ease some of our worries."