CIPS News


UK service sector registers modest growth in November

CIPS 5 December 2011

Surprise growth in services sector confounds commentators

The November PMI results have recorded a further month of modest growth for the UK service sector.

 This modest growth is supported by incoming new business as well as increased advertising and marketing activity; however these gains are undermined by the current economic climate. Accelerated falls in backlogs and employment along with higher utility costs and competitive pressure still leave the sector experiencing uncertainties.

Job cuts were recorded for the fourth time in the past five months in November with the rate of job losses in the sector being the fastest in the last 15 months.

Figures from the seasonally adjusted Business Activity Index recorded 5.2 in November which is a modest improvement from October’s 51.3. These figures together add to the eleventh successive month of growth for the UK service sector.

Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “Whilst the service sector is still growing, it is doing so at a modest rate and businesses remain under strain. Margins are being squeezed by the pincer of falling new business growth and higher input costs. Strong headwinds from the continued Eurozone crisis combined with public sector pressures are adding to the anxiety levels amongst many businesses in the sector.
 
With the London 2012 Olympic and Paralympic Games in sight, there is some optimism about next year with many panellists also expecting new product launches and projects to boost activity over the coming months. Margins will continue to be squeezed, however, as intense competition means businesses will struggle to increase their prices.”

For press enquiries, call the Press office on 01780 756777 or email: press@cips.org. The PMI data is available to purchase.


 

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