Five month high for service sector

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The final month of 2011 provided a positive end to the year for UK service providers as activity and incoming new business both rose at their strongest rates since July, according to the latest Markit/CIPS survey of the UK service sector.

There were reports that enquiry levels were up, with higher marketing and promotional work helping to drive growth.

A number of panellists continued to report that the economic climate remained tough, reflected by continued margin pressure (costs again rose steeply while output charges were little moved), while business confidence matched the two-and-a-half year low seen in September.

The headline index from the survey – the seasonally adjusted Business Activity Index – posted a five-month high of 54.0 in December, a solid improvement on November’s 52.1. Growth was sustained throughout each month of 2011 (although generally at sub-trend rates) and the latest rise in activity was driven by a similarly solid increase in new business.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply said: “December capped a year of reasonable growth for the UK service sector but significant risks still lurk under the surface, not least the outcome of on-going efforts to shore up Eurozone economies. Companies exposed to the poorer performing manufacturing and construction industries in particular will need to watch out for the impact of these dangers.”

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