Service sector bucks bank holiday bumps

3 June 2011

3 June 2011 | Adam Leach

The UK service sector grew for the fifth successive month in May, but more slowly than in April.

The latest Markit/CIPS UK Services Purchasing Managers’ Index (PMI) for May recorded a figure of 53.8, lower compared with the 54.3 in previous month, indicating slower growth in the sector. A rise in both new business and enquiries was behind expansion, indicated by the figure staying above 50, for the fifth successive month.

The slowdown was attributed primarily to businesses completing contracts at a higher frequency than securing new contacts. The disruption caused by bank holidays last month was also highlighted as a factor.

Though the rate of inflation eased slightly, prices increased for the eighth consecutive month, with companies indicating that higher inputs were forcing them to increase costs. The hotel and catering industry was hit particularly hard by these rises.

“Despite more muted growth there are some positives in May’s survey. Most notably, the sector stayed on a growth trajectory despite the hindrance of the additional bank holidays in late April which, as shown earlier this week, also had an impact on manufacturing activity over the same period,” said CIPS CEO David Noble.

“With confidence at a three-month high driven by a rise in new business, particularly in business services and transport, we might expect to see a stronger expansion next month.”

Employment in the sector remained broadly unchanged.

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