The IHS Markit’s Services PMI rose from 61.0 in April to 62.9 in May
The UK economy is seeing substantial growth as the service sector experiences soaring demand on lockdown restrictions being eased across the country.
According to the latest survey of purchasing managers at UK services firms, activity has risen during May at the quickest rate in 24 years.
A number of companies reported a recovery in both consumer and business spending, while new order rose at a rate not seen since October 2013.
As a result, companies took on more staff, leading the strongest rate of employment growth in over six years.
In May, lockdown restrictions were eased to the point where pubs and restaurants were able to serve customers indoors. This came after the reopening of non-essential shops in April.
The sharp rise in demand is also pushing costs up. Businesses raised their own prices by the largest amount since the survey began in 1996.
The IHS Markit’s Services PMI rose from 61.0 in April to 62.9 in May. Anything above 50 is an indicator of growth, while the recorded level shows a rapid level of growth, having contracted in previous months.
Tim Moore, economics director at IHS Markit, says the economy has the success of the vaccine roll-out to thank for recent strong growth.
“UK service providers reported the strongest rise in activity for nearly a quarter-century during May as the roll back of pandemic restrictions unleashed pent up business and consumer spending. The latest survey results set the scene for an eye-popping rate of UK GDP growth in the second quarter of 2021, led by the reopening of customer-facing parts of the economy after winter lockdowns.”
“Pressure on business capacity due to a spike in demand and staff hiring difficulties emerged as a major challenge for service sector companies in May. Job creation was the strongest for over six years, but backlogs of work accumulated to the greatest extent since the summer of 2014.”
The hospitality industry is now facing a recruitment crisis as it struggles to fill thousands of vacancies as the economy is reopening.
