Economy showing signs of a recovery – survey

Jun 4 2009 by Peter McCusker, The Journal

CIPS said companies reported a general improvement in business sentiment, which appeared to have led to an increase in spending and more confidence to commit to new contracts.

Service providers lowered their output prices for the seventh successive month and some firms passed on reduced input costs.

But the sector continued to suffer from historically sharp levels of job cuts, although the rate of employment decline was its slowest for seven months.

Roy Ayliffe, director of professional practice at CIPS, said: “The UK services sector has bounced back much quicker than expected, demonstrating that it really is the engine of the modern economy.”

He said May’s data indicates that the UK economy may emerge from recession “much sooner than was originally thought” with construction, manufacturing and service sectors all showing significant improvement.

“However, it’s far too soon to crack open the champagne – against a backdrop of ongoing price discounting and historically steep job shedding, there are risks that the recent improvements in service sector performance will not be sustainable,” he said.