New figures have shown the UK’s services sector continued to grow last month as sunnier economic forecasts boosted orders, despite rising costs.
The S&P’s purchasing managers’ index (PMI) for the UK’s services sector jumped to 55.0 in April, the highest level recorded since May 2023. A mark above 50 represents economic growth, rather than contraction.
It is a rise from March, when the same survey showed a reading of 53.1, down from 53.8 in February and below the earlier 53.4 ‘flash’ estimate.
The survey, which measures private sector activity, showed a spike in new orders but cost pressures also increased at the fastest rate since August.
Improvement in the economic forecast was frequently mentioned as a driving force behind April’s strong sales but several UK services firms pointed to a 10 per cent surge in the national minimum wage as the main cause of the inflationary pressure.
And some said that escalating salary expenses contributed to the deceleration in employment growth, marking its lowest level this year.
“The latest survey results are consistent with the UK economy growing at a quarterly rate of 0.4 per cent and therefore pulling further out of last year’s shallow recession,” said economics director Tim Moore from S&P Global Market Intelligence.
While the services sector experienced a boost, the manufacturing Purchasing Managers’ Index (PMI) slipped back into contraction in April as the sector suffered from uncertain demand and disruption in the Red Sea.
The composite PMI index rose from 52.8 to 54.1.
It comes as Bank of England officials are preparing to meet next week to set interest rates.