The UK services sector expanded at a stronger pace in April, although rising costs and the war in Ukraine combined to contain the pace of expansion, results showed on Thursday. an S&P Global survey.
The Chartered Institute of Procurement & Supply’s Final Services Purchasing Managers Index came in at 58.9 in April, which was above the flash score of 58.3 but down from 62.6 in April. March.
Input costs have increased the most in nearly 26 years of data collection due to rising fuel costs, along with higher energy loads and wages. In turn, companies increased their own fees at a pace that was only slightly below March’s record high.
Growth in new orders has slowed sharply to its lowest level in 2022 so far. Meanwhile, new Business from abroad remained broadly unchanged for the second consecutive month.
Despite facing significant cost pressures, service providers continued to increase their workforce, particularly in response to increased new business.
The issues of the rising cost of living and the war in Ukraine rattled confidence early in the second quarter, with sentiment falling to a year-and-a-half low.
Duncan Brock, Group Director at CIPS, said: “Although the overall index remained in growth territory, the services sector shows signs of boiling over as the trickle-down effects of the highest prices in 26 years have had an impact on orders and the mood of business.”
The composite production index fell to 58.2 in April from 60.9 in March. The growth rate remained high, but slowed to a three-month low. The flash reading was 57.6.
Although the pace of expansion of activity in services slowed at the beginning of the second quarter, it remained much faster than that observed for manufacturing production.
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