Member Article

Signs of rebound in service sector

The UK service sector has shown signs of a return to growth in the early stages of 2013, the UK Services PMI from Markit and CIPS reveals.

Headline seasonally adjusted Business Activity Index rose back above the 50 no-change mark in January, the first rise in activity since last September.

The results refute claims that heavy snow and severe weather conditions hampered activity during January.

Confidence was also seen to be building, as performance expectations were at their highest for eight months, despite worries that public sector spending cuts would have an adverse impact.

This had an impact on hiring decisions, as staffing levels increased throughout January. While modest, the increase was the sharpest for six months.

Service providers had responded to higher input costs by raising their own output charges to the greatest degree in over a year-and-a-half.

Chris Williamson, chief economist at survey compilers Markit: “A huge sigh of relief accompanies these numbers, as a return to growth of the service sector in January greatly reduces the likelihood of the UK falling back into a “triple-dip” recession.

“Companies reported the strongest rise in services activity for four months, building on the promising news from manufacturers last week, where output was reported to have grown at the fastest rate for 16 months in January. Although construction remains a worry and continues to contract, the PMIs collectively point to the UK growing marginally again in January.

“Stronger growth would inevitably have been recorded had the country not suffered the heavy snowfall, suggesting the underlying trend is even stronger than these numbers indicate.”

This was posted in Bdaily's Members' News section by Tom Keighley .