Service sector

UK service sector growth hits highest level in seven years as Covid restrictions ease | Service sector

The unleashing of pent-up demand has given Britain’s services sector its fastest monthly growth in more than seven years despite some signs of a flattening in activity over the past week, two separate snapshots showed economy.

In its monthly health check, IHS Markit/CIPS reported sharp increases in consumer and business spending as lockdown restrictions were eased.

Increased confidence that the government would be able to meet its roadmap for opening up the economy meant that employers were willing to hire staff, with job growth at its strongest since October 2015.

The IHS Markit/CIPS Purchasing Managers’ Index – a guide to the overall state of a sector responsible for almost 80% of UK domestic output – stood at 61.0 in April, down from 56.3 in March and above the late-reported 60.1 flash estimate. last month. Any reading above 50 indicates the sector is expanding.

Meanwhile, the weekly economic data summary from the Office for National Statistics showed an increase in restaurant bookings, a drop in retail footfall and a broadly unchanged picture of credit card use and debit.

Seated dinner bookings last Saturday were 71% of their comparable weekend level two years ago, an increase of nine percentage points from the previous week, the ONS said.

The number of shoppers in high streets and retail parks in the week ending May 1 was 74% of the level in the same week of 2019, down two points from the previous week. While many businesses in the hospitality and leisure sector are still affected by Covid-19 restrictions, the ONS said around 3.3 million workers remained furloughed.

Tim Moore, chief economics officer at IHS Markit, said: “The roadmap for reopening leisure, hospitality and other customer-facing businesses has resulted in a surge in forward bookings and the start of new projects in the service sector. If the rebound in order books continues on its recent trajectory for the remainder of the second quarter, service sector output growth is most likely to exceed the survey record set in April 1997.

“The successful rollout of the vaccine continued to support expectations of a strong recovery over the coming year, as service providers responded by boosting employment and capital spending in April. Job creation was the strongest in five and a half years and, for the first time since the start of the pandemic, reports cite staff shortages as a factor in slowing growth.