The Markit/CIPS Purchasing Managers’ Index® (PMI®) for the services sector posted at 54.9, up from April's 52.9 amidst rising workloads and an expected rise in employment.
Input cost inflation hits a 12 month low with higher sales volumes.
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply:
“The biggest surge in new business for three years in the dominant services sector could trigger hopes that a recovery is finally here. This was underlined by the sharpest growth in activity in over a year and increased confidence for the year ahead. Improved market conditions and even better weather, also had a positive effect.
“The boost in new business has resulted in increased backlogs of work for the second month in a row for the first time since 2007. This positive pressure on capacity may enable firms to increase staff numbers and sustain business growth throughout Q2.
“Output prices dropped in May for the first time since September 2012, a reminder of the continued competitive pressures firms are under. The easing of input prices has enabled firms to protect margins to some extent, but reflect the on-going impact of weakness further down the supply chain. Companies remain vigilant, but are ramping up efforts to generate growth and are increasingly confident of their ability to do so.”
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