UK services see modest November growth

The UK’s service sector managed to show modest growth last month, despite concerns regarding the country’s wider economic health.

The Markit/Chartered Institute of Purchasing & Supply (CIPS) UK Services Purchasing Managers’ Index stood at 52.1 points in November, remaining above the 50-point no-change mark and improving on October’s 51.3.

Improved activity was caused by incoming new work and increased marketing, the index shows. New business growth has been maintained for 11 months running, but the pace of expansion fell last month.

However, business confidence in the services sector fell from October’s five-month peak, owing to pessimism on general economic health.

David Noble, the chief executive at the CIPS, adds: “Whilst the service sector is still growing, it is doing so at a modest rate and businesses remain under strain. Margins are being squeezed by the pincer of falling new business growth and higher input costs.”

In addition, the latest figures from manufacturers’ organisation EEF and business services firm BDO add to fears that UK manufacturing activity is slowing.

Manufacturing activity in the last quarter was lower than expected, with output and order balances falling from their historic highs at the start of the year and back towards their long-run averages.

Tom Lawton, the head of manufacturing at BDO, says: “Although exports have maintained a relatively strong performance in the quarter the continuing problems within Europe, which is by far our biggest export market, are clearly having an effect and generally increasing a feeling of nervousness and lack of confidence.”

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