Improved business confidence helped the service sector to rack up its 22nd consecutive month of growth in January, figures out today showed.
Anecdotal evidence suggested activity in the wider economy was higher and clients of services firms were increasingly willing to invest more, according to a monthly survey by the Chartered Institute of Purchasing and Supply (CIPS).
Optimism in the sector hit its highest since last June, the CIPS said.
The CIPS’ Purchasing Managers’ Index for services lifted to 55.9 during the month from December’s 54.9, with any figure above 50 indicating growth.
The CIPS said the data indicated a robust increase in business activity levels, with particularly sharp growth in IT and computing.
A further rise in levels of new work placed with UK service providers underpinned business activity during the month, the CIPS said.
CIPS director of professional practice Roy Ayliffe said: “Overall, the future outlook for the services sector was extremely positive.”
Royal Bank of Scotland analyst Geoffrey Dicks said the rise in activity after December’s fall was welcome, although the index remained well below the very strong readings a year ago.
“The non-manufacturing part of the economy appears to have made a good start to 2005,” Mr Dicks said.
Vicky Redwood of Capital Economics said she expected service sector activity to weaken as the housing downturn prompted a slowdown in household spending growth.
“But for now at least, today’s survey suggests the sector appears to be holding up well, helping to offset the rather weaker activity in manufacturing,” she said.
John Butler at HSBC said: “The recent news flow does seem to have shifted the risks towards the next move in interest rates being up rather than down.”
References: EGi News 03/02/05
