Service Sector Activity Expands as Jobs, Charges and Backlogs Decline

The latest CIPS/Markit UK Services PMI figures, released today, show:

• The headline seasonally adjusted Business Activity Index reached 54.1, a near two-year high.
• Activity expanded for a fourth successive month and at the strongest rate since September 2007.
• There were gains in new business with new orders rising for a third time in four months.
• Backlogs of work declined for a twenty-third successive month, and at an accelerated rate that was the fastest since March.
• Average output charges declined for a tenth successive month as the rate of deflation accelerated since July.
• Staffing levels declined for a sixteenth consecutive month, although the rate of contraction eased for a second month in a row to the slowest since September 2008.
• Input costs rose during August, as they have done throughout the survey’s history, as the rate of inflation accelerated and hit a nine-month high.

The CIPS/Markit UK Services PMI covers transport & communication, financial intermediation, business services, personal services, computing & IT and hotels & restaurants.

Data: Markit Economics [PDF]

Note: The index is a “diffusion index”, it is calculated by adding together the percentage of respondents that reported an improvement plus half of the percentage that reported no change. Results will vary around the 50.0 “no-change” level. Readings above 50.0 signal an improvement, readings below 50.0 a deterioration. The greater the divergence from 50.0, the greater the rate of change anticipated by respondents.

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