UK Service Sector Expands On Robust Rise In New Business

(RTTNews) - The UK service sector expanded for the second month in a row in March as new business intakes grew the most in a year driven by greater confidence among clients in both domestic and foreign markets.

The final Chartered Institute of Procurement & Supply services Purchasing Managers' Index posted 52.9 in March, survey data from S&P Global revealed Wednesday. The score was down from 53.5 in February but marginally above the flash estimate of 52.8.

The average score for the first quarter was 51.7, suggesting a turnaround in business activity after the marginal fall seen in the final quarter of 2022.

Driven by rising business and consumer confidence, there was a marked increase in new business intakes. Total new orders increased at the strongest pace since March 2022.

Export sales posted the biggest growth for at least eight-and-a-half years driven by strong demand from the US and Europe.

There was a marginal increase in employment in the service sector. Employers hired staff for new projects and to rebuild business capacity. However, tight labor market conditions and wage pressures limited recruitment activity. Service sector companies cited rising staff costs and energy prices as reasons for higher business expenses. Nonetheless, the latest growth in operating costs was the least marked for 22 months.

The survey also showed another round of steep increase in prices charged for services. That said, the latest rise was the softest since August 2021.

Business expectations for the year ahead improved for the fifth straight month in March. Optimism reached its highest level since March 2022.

The overall private sector expanded for the second month in a row in March after marginal declines seen between August 2022 and January 2023. At 52.2, the composite output index matched the flash estimate but was down from 53.1 in February.