Service sector still in the slow lane

  • Business activity rises at subdued pace in April
  • Weakest upturn in employment since March 2017
  • Inflationary pressures moderate

The IHS Markit/CIPS services purchasing managers’ index rose only slightly to 52.8 in April, from March’s 20-month low of 51.7.

Whilst the latest reading signalled a moderate increase in service sector activity, the rate of growth is the second-weakest since September 2016, potentially lowering the chances of an interest rate increase next week.

Subdued consumer willingness-to-spend was cited as a key reason for the lack of business activity growth in April, according to respondents, along with reports that concerns about the domestic economic outlook had acted as a brake on spending by corporate clients. Some also said the completion of work had been disrupted by the snow in March and higher payroll costs and tight labour market conditions had weighed on staff recruitment in April.

Chris Williamson, Chief Business Economist at IHS Markit, comments: “The surveys have indicated that sales, investment and hiring are being hit by uncertainty about the economic outlook as well as sluggish domestic demand, notably among consumers.

“The disappointing services data will add to expectations that the MPC will take its finger firmly off the rate hike trigger.”   

In this rapidly changing economic landscape, it is essential that all business owners and managers be aware of income and expenditure by keeping proper records and monitoring trends and patterns. Profit and loss accounts will help you understand how your business is progressing, as well as alert you to any potential issues which might arise, giving you ample warning to rectify the problems or make the necessary adjustments to keep your business on track and successful.

At Beavis Morgan, our specialist advisers to SMEs are available to provide general business guidance and to structure your business for tax. We can also assist with long and short-term forecasts, budgets, business plans, sensitivity analysis, and calculating and checking compliance with covenants.

Contact Steve Govey or your usual Beavis Morgan Partner for further information about how we can assist you and your business.