Activity in services sector still in decline

Business activity among the services sectors declined for the second consecutive month in June, but higher export orders — to regions such as Britain and the Middle East — were also seen.

The latest monthly services sector purchasing managers’ index from NCB Stockbrokers also showed declines in staffing levels, profitability and confidence levels among respondent companies.

The overall fall in business activity in the sector was driven by continued weak client confidence levels; but was only fractional and noticeably weaker than the decline measured in May.

Likewise, the employment decline was classed as being only a “marginal reduction”. But the fall in profitability among services firms was seen as being marked with the pace of reduction quickening to the sharpest pace since the three months to January.

Two positive elements of the latest index were the marginal increase in new business volumes and the rise in new export business; the latter now on the rise for 11 consecutive months.

“Overall, new business has now risen in four of the past five months,” the NCB said. “Respondents partly linked growth to increased marketing activity, although there were reports that clients remained reluctant to commit to new projects.”

With regard to employment, that element of the latest index was down for the second straight month, with half of the sectors routinely measured showing fresh job cuts.

“Two of the four broad sectors covered by the survey posted falling employment in June, namely financial services and transport/leisure,” said Brian Devine, NCB’s chief economist.

“Financial services staffing levels decreased marginally, extending the current sequence of job cuts to nine months. The transport and leisure sector posted a reduction in employment for the 11th month in the past year. TMT [technology, media and telecommunications] continues to be the leading light, with employment expanding each month in 2012,”