Growth in the services sector slows in May
Growth in the services sector slowed in May, from a 10 month high recorded in April, according to the latest data from the Investec Services PMI report.
The headline PMI came in at 59.5, down from the rate of 61.1 recorded in April.
The report found that the rate of growth in new business was unchanged in May from the previous month, with strengthening economic conditions and marketing activities among the factors credited for the sharp pace of growth.
However, growth in new export business slowed slightly, driven by fluctuating currencies.
On the margins side, input costs included to rise, with higher staffing, fuel, and insurance costs, cited as factors behind the rising costs.
Firms are attempting to respond to this by increasing output prices, however some firms surveyed felt that demand was sufficiently robust to handle these increased charges.
The forward-looking ‘Business Activity: Expected Levels in 12 Months’ index strengthened to a three month high in May, with nine times as many respondents predicting an increase in business activity over the next 12 months compared to those that forecast a decrease.
“Such optimism [from respondents] appears well-founded given the improving international backdrop,” Philip O’Sullivan of Investec said.