Service sector expanding, says CIPS

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Confidence is on the up in the UK service sector, according to the CIPS/Markit Business Activity Index which rose to 56.8 in December from 56.6 in November.

Over the past three months the index has been showing readings consistent with robust growth above the long-term series average.

Large companies led the overall expansion, while business services remained the best performer on a sector basis.

The survey shows a rise in new business for the sixth month in a row. Growth was the steepest since September 2007.

Service providers were confident that business activity would be higher than present levels in twelve months’ time.

Positive expectations were linked to the start of new projects, planned marketing and recent growth of pipeline business. Subduing confidence to some extent were concerns that public expenditure cuts would have an adverse effect on the UK economy.

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: “Last year saw the UK service sector recover at an extraordinary rate and end 2009 on a high. This was on the back of stronger economic activity, new business wins – especially among larger companies – and growing client confidence. As the biggest contributor to the UK economy, services is undoubtedly heralding the way for wider economic growth in 2010.”

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