UK service sector growth hits seven-year high

The UK's services sector rebounded in April with growth climbing to a seven-year high as lockdown restrictions were eased, according to an influential survey.

The sector, which accounts for 80% of the UK economy, had the fastest rise in output since October 2013.

The purchasing managers' index from IHS Markit/CIPS climbed to 61 for April, up from 56.3 in March.

Any figure above 50 shows growth in the sector.

"April data illustrates that a surge of pent-up demand has started to flow through the UK economy, following the loosening of pandemic restrictions, which lifted private sector growth to its highest since October 2013," said Tim Moore, economics director at survey compiler IHS Markit.

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He said the road map for reopening leisure, hospitality and other customer-facing activities "resulted in a sharp increase in forward bookings and new project starts across the service sector".

He added that if the rebound in order books continues along its recent trajectory during the rest of the second quarter, "then service sector output growth looks very likely to surpass the survey-record high seen back in April 1997".

Increasing confidence

"Service sector companies were creating jobs at a level last seen since in October 2015 and paying more in wages to get the best talent; a sign of ever-increasing confidence about the year ahead," said Duncan Brock, group director at the Chartered Institute of Procurement & Supply.

He said the positive trend in recovery is likely to accelerate in the coming months, but warned that stretched supply chains remain a sticking point, along with inflation potentially biting chunks out of wages and business margins.

That threatens "to put a brake on this fast track to economic normality", he added.