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5 October 2011 | Adam Leach
A rise in new business and
increasing demand helped to bring about growth in the UK services sector during
September.
The Markit/CIPS UK Services Purchasing
Managers’ Index reported a score of 52.9 for the month indicating a solid rise
in activity in the sector since August when it hit an eight-month low. The
improved performance was attributed to more new business and an increase in
overall demand.
Purchasing managers surveyed
reported that new orders had risen from a low base and that there had been a
concerted effort to win new orders amid an uncertain environment.
David Noble, CEO at CIPS, said:
“A small ray of sunshine for the services sector as stronger demand and a
pick-up in new business means we are moving away from August’s darker
performance.”
Despite the rise in overall
activity, business confidence across the sector continued to drop and hit a
30-month low. Employment activity also continued to decline with companies
generally reluctant to take on new staff. Despite input prices continuing to
rise, output prices remained unchanged, indicating an inability or reluctance
to pass the rises onto customers.
Noble, said: “Businesses are battling
against tough competition, and input costs are continuing to rise at strong
rates. Those that are more positive and are predicting activity to increase are
looking to the 2012 Olympics for a boost, but it may take more than this for
real, sustained growth.”
Chris Williamson, chief economist
at Markit, said: “Activity bounced back from August’s eight-month low, but
August had been disrupted by riots in some cases, and many firms also reported
that the ongoing expansion was only achieved by eating further into backlogs of
work. This is clearly not sustainable and growth of new business will need to
pick up in the coming months to prevent a downturn in both business activity
and employment in the final quarter of 2011.”
