UK service activity grows at highest rate for eight months

Adam Leach is a freelance business journalist
3 May 2013

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Activity in the UK services sector increased at the highest rate in eight months on the back of a marked bump in new business wins, according to a report.

The Markit CIPS UK Services PMI recorded a business activity index score of 52.9 for April, a score above 50 indicates growth, narrowly improving on the March score of 52.4. Unlike the construction and manufacturing sectors, services has seen activity increase in each month of 2013.

Respondents to the survey reported a strong increase in incoming new business, with sales rising at the highest rate for almost a year. The influx of new business prompted a rise in backlogs of work, which in turn led businesses to increase payroll numbers to carry out the workload.

Input costs for companies rose at a marked rate, but output costs stayed broadly unchanged, indicating that buyers margins are getting squeezed. Despite almost half, 46 per cent, of respondents indicating that they expect conditions to be better in 12 months time, overall business confidence dropped in the month, with uncertainty around economic conditions once again weighing heavily on forecasts.

David Noble, CEO at CIPS, said: "New products, better weather and increased foreign demand, alongside improved market conditions, have seen services sector activity grow at its fastest pace for eight months. New business has followed suit, building on the solid trend shown in the first quarter. This steady performance ought to be reassuring but as it remains in its infancy there's still some way to go until everyone can breathe a sigh of relief."

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