UK service sector continues to expand

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The UK service sector continued to expand in March, as economic recovery remained on track, according to the latest CIPS/Markit Purchasing Managers Index. Activity rose in line with higher levels of new business, and helped to support the first increase in employee numbers for just under two years.

The CIPS/Markit Business Activity Index was 56.5, down from 58.4 in February, but well above the 50.0 no-change mark. Moreover, despite the disruptions seen earlier in the year, average growth in the first quarter was broadly similar to that in last quarter of 2009.

The report said that respondents noted a more positive marketplace, with growth also supported by promotional activities. “New business has now risen for nine months in a row, with growth remaining marked despite slipping on February’s two-and-a-half year peak.”

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: “While the services sector as a whole is recovering strongly now, smaller businesses are lagging behind. Purchasing managers reported that these businesses are still suffering from the effects of the recession and continue to lay-off staff despite large and medium sized companies expanding their payroll. It won’t be until we see these smaller businesses really start to recover that we can say the services sector is returning to full health.”

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