UK services sector remains buoyant

Strong increases in new business ventures and products helped the UK service sector expand at an impressive rate in April, figures showed today.

The Chartered Institute of Purchasing and Supply’s (CIPS) purchasing managers’ index found the sector grew for the 13th consecutive month as market conditions remained buoyant.

Levels of business activity and outstanding work grew faster than the previous month, while employment increased at a slightly faster rate.

Strong gains in new work, product development and continued marketing activity helped the headline business activity index rise to 59.0 from 58.7 the previous month.

Although levels of incoming new business rose for a 12th consecutive month, this index grew at a slightly slower pace compared with March.

Service providers said conditions for conducting business were favourable and that clients were highly active during the period.

Gains in new work were particularly strong in the hotels and restaurants, transport and communications and business-to-business categories.

This substantial growth in new work put pressure on service providers’ operating capacity in April as they struggled to deal with backlogs, the CIPS said.

Rising workloads and company expansions contributed to a slight rise in the employment index, which rose to 52 from 51.9 in March.

Confidence among firms remained high, with nearly 60% saying they expected an increase in business activity within a year – although this index grew at a slower rate than the previous month.

The CIPS report on the service sector covers transport and communication, business services, hotels and restaurants, personal services, financial intermediation, computing and IT.