UK services output returns to growth, but weakness prevails

Mark Johnson's picture
by Mark Johnson

Britain’s services sector returned to growth last month according to the latest monthly data from IHS Markit/CIPS.

The UK Services Purchasing Managers’ Index (PMI) rose to 50.4 in April from 48.9 the previous month. 

UK service providers recorded a rise in business activity during April, thereby signalling a return to growth following the marginal decline seen during the previous month, IHS Market noted. 

Subdued demand

However, the rate of expansion was only slight, it said, and another fall in new work highlighted that subdued underlying demand conditions persisted.

Employment numbers were broadly unchanged during the latest survey period, with companies reporting that higher wage costs and weaker sales had led to cautious staff hiring policies. 

“A near-stagnant service sector in April means that all three major parts of the economy were struggling to grow in April”, said Chris Williamson, Chief Business Economist at IHS Markit. 

“Although the service sector joined construction in reporting a return to growth, in both cases the expansions were only marginal. An upturn in manufacturing is meanwhile showing signs of waning, as a temporary boost from Brexit-related stockpiling faded in April.

Activities in the service sector include retail, banks, hotels, real estate, education, health, social work, computer services, recreation, media, communications, electricity, gas and water supply.

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