Monday, 05 September 2011 13:58
This month's figure of 51.1 reflects the lowest level of confidence for 12 months.
After the disappointing Purchasing Managers’ Index (PMI) results for construction and manufacturing, the services sector has followed the trend with a four-point dip.
Measuring just above the no change mark of 50, this month's figure of 51.1 reflects the lowest level of confidence for 12 months. Purchasing managers report weaker new business levels and a brittle global economy.
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply: "This eye-watering decline in this month’s Services PMI figures shows the full impact of current weaknesses and instability in the wider economy.
"As the sector clings onto growth, purchasing managers are also suffering from a wavering trend in new business. Anarchy on the streets in some parts of the UK during August also didn’t help to stave off the loss in momentum since July.
"Cut-throat competition means that companies are unable to fully pass on higher costs to customers and continue to feel the need for marketing and, in some instances, discounting initiatives to fill in the gaps. This is fairly typical in meager times as businesses tend to sacrifice profits, focusing on protecting sales and increasing market share instead, although this is clearly not sustainable in the longer term.
"With a number of businesses, particularly those in the South East, hopeful about the impact of the 2012 Olympics, there are perhaps better times to look forward to. Lower input prices and a further easing of inflation would also be extremely welcome at a time when it’s needed most."
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