UK services PMI slips from two-year high in Nov-CIPS

inspector_monkfish

09:28 03Dec09 UK SERVICES PMI FALLS TO 56.6 IN NOV FROM 56.9 IN OCT (FORECAST 57.0)
09:28 03Dec09 UK SERVICES NEW BUSINESS INDEX RISES TO 56.8 FROM 55.4, HIGHEST SINCE SEPT 2007
09:28 03Dec09 POLL-UK services PMI slips from two-year high in Nov-CIPS



LONDON, Dec 3 - Britain's service sector grew more slowly than expected in November, a purchasing managers' survey showed on Thursday, but new business continued to pick up and firms were optimistic.

The Chartered Institute of Purchasing and Supply/Markit activity index fell to 56.6 last month from October's two-year high of 56.9. That was the seventh consecutive month above the 50 level that indicates expansion but below expectations for a rise to 57.0.

New business rose for a fourth month in a row and at the fastest pace since September 2007, the PMI survey reported.

"Although growth weakened marginally during November, the recovery of the UK service sector remained intact," said Paul Smith, a senior economist at Markit.

"Moreover, the forward-looking new orders and business expectations indexes both improved, raising hopes of robust expansion in the coming months."

The figures show Britain's service sector -- which accounts for around three-quarters of the economy -- has now grown for seven months running. Markit said the survey suggested the service sector was on course for a quarterly expansion of around 1.0 percent in the fourth quarter.

However, recent PMI surveys have not been matched by the official national data and some analysts worry that "survivor bias" and problems inherent with sentiment-based indices mean the PMI figures are overstating the true picture.

Britain's economy shrank 0.3 percent in the third quarter after a contraction in services output that surprised economists given the PMI survey had reported activity growth throughout the period.

The economy looks set to return to growth in the fourth quarter, something that could give a boost to Prime Minister Gordon Brown, who is trailing the opposition Conservatives ahead of an election expected in May.

The PMI report said the latest expansion had been centred on the financial and business services sectors, with large companies benefiting more than small ones.

Nonetheless firms continued to shed jobs, albeit at the slowest rate in more than a year, and there was evidence to suggest that operating conditions remained tough. Firms cut output charges despite the steepest rise in input costs for over a year, an indication that competitive pressures remained intense.

setmefree2

Reasonably good news then :T

Thrugelmir

Firms cut output charges despite the steepest rise in input costs for over a year, an indication that competitive pressures remained intense.

To compete and survive Companies are cutting selling prices to retain existing business let alone win new. Trading conditions are tough, so no doubt there will be further casualities for a while yet.

A sign that we are in deflationary times for some products and services.

stueyhants

A lot of compaines have remained in profit due to shedding staff. Whilst this helps their bottom line it doesn't do a lot for their future custommer base.

Thrugelmir

stueyhants wrote: »

A lot of compaines have remained in profit due to shedding staff. Whilst this helps their bottom line it doesn't do a lot for their future custommer base.

The customer base is diminishing. Thats why companies are contracting.

For service based companies staffing levels can easily be increased.