UK Service Sector Recovers In May
June 05 2018 - 03:52AM
RTTF2
British service sector activity expanded at the fastest pace in
three months in May, despite Brexit-related uncertainty, survey
data from IHS Markit showed Tuesday.
The IHS Markit/Chartered Institute of Procurement & Supply
Purchasing Managers' Index, rose more-than-expected to 54.0 in May
from 52.8 in April. The index was forecast to improve to 53.0.
Any reading above 50 indicates expansion in the sector. The
latest score was the highest since February.
New business volumes continued to rise at a relatively subdued
pace in May as uncertainties surrounding Brexit continue to hold
back decision making among clients. The latest increase in overall
new work was still one of the weakest seen since the summer of
2016.
At the same time, tight labor market conditions placed upward
pressure on staff wages and difficulties recruiting suitably
skilled staff in May.
A combination of rising salary payments and greater fuel bills
resulted in another strong increase in average cost burdens.
Despite higher input cost, the rate of charge inflation slowed
further to its weakest since June 2017.
Business confidence across the service sector moderated for the
third time in the past four months.
The three PMI surveys indicate that GDP looks set to rise by
0.3- 0.4 percent in the second quarter, Chris Williamson, chief
business economist at IHS Markit, said.
The signs of economic growth rebounding in the second quarter
will likely up the odds of the Bank of England hiking interest
rates again in coming months, likely August, but with the forward
looking indicators suggesting that the economy could relapse, a
rate rise is by no means assured, Williamson added.
Data provides further reassurance that the weakness in GDP
growth in the first quarter will prove temporary, Ruth Gregory, an
economist at Capital Economics, said.
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