Service sector bounces back in January as Omicron’s curb eases

According to new figures, the recovery in the UK service sector regained momentum last month as the Omicron coronavirus limits and case numbers were relaxed.

The up-and-coming IHS Markit / CIPS UK Services PMI survey hit 54.1 in January, bouncing off the 10-month low of 53.6 in December.

Scores above 50 indicate sector growth.

The latest data show that sector activity improved during the month as Plan B restrictions and concerns about the spread of the Omicron variant of Covid-19 were alleviated.

Duncan Brock, Group Director of the Chartered Institute of Procurement and Supply (CIPS), said:

“The improved customer foothold and the removal and removal of Omicron’s restrictions have boosted business activity in the largest sectors of the UK economy.

“The improvement was minor, but it brought better news compared to the decline last month, but there are more new businesses and some orders from abroad.”

The companies surveyed reported that new business growth had “rapidly accelerated” as futures bookings were boosted by alleviating the Omicron-related turmoil.

Export sales also recovered earlier this year as companies emphasized increased demand from China and the United States.

However, companies also reported sharp cost pressures in early 2022.

Tim Moore, Economic Director of IHS Markit, said:

“Inflation in input costs accelerated again in January, and service providers responded by raising prices charged at the fastest rates since the index was launched in July 1996.”

The increased waiting time for new hires and the widespread absence of staff due to the Covid-19 case also contributed to another increase in the work backlog across the sector in January.

PA media