Financial News: UK Services Growth Hits 1-Year High

UK Services Growth Hits 1-Year High

05/04/2023 - 09:41:00 (RTTNews)

(RTTNews) - The UK service sector expanded at the fastest pace in a year, driven by a sharp upturn in new orders, although strong inflationary pressures continued to persist, survey data from S&P Global revealed Thursday.

The final Chartered Institute of Procurement & Supply services Purchasing Managers' Index rose to 55.9 in April from 52.9 in March. The flash reading was 54.9.

New work increased in April at the fastest pace in 13 months, supported by an upturn in domestic demand and export sales, the survey revealed.

Foreign demand also improved for the fifth straight month in April, as companies mentioned a greater number of international arrivals and a general recovery in demand from EU and US clients.

In April, improved sales pipelines and rising business confidence contributed to job creation across the service economy. The rate of employment growth was the fastest since September last year.

Nonetheless, the British service sector reported tight labour conditions amid shortages of skilled candidates adding to wage pressures.

On the price front, input price inflation accelerated for the first time in five months, linked to higher salary payments and elevated energy costs.

As a consequence, selling price inflation rose in April from a 19-month low seen in the previous month.

Service providers remain upbeat about output expectations in the next twelve months, with the index reaching its highest level since March 2022. This brighter outlook was supported by resilient consumer spending and improving confidence regarding the global economic outlook.

"With the King's Coronation around the corner and three bank holidays in May, the sector is optimistic for continued strong demand as spring turns to summer," John Glen, chief economist at CIPS, said.

The overall private sector expanded for the third month in a row in April despite a back-to-back reduction in manufacturing production. The composite output index rose to 54.9 from 52.2 in the previous month. The reading was above the flash score of 53.9.

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