UK service sector sees fastest growth in 24 years as consumers start to spend again
Activity in Britain’s service sector shot up at its fastest rate for 24 years in May, as pandemic restrictions loosened and consumers began to spend again.
The recovery saw the closely watched services purchasing managers’ index (PMI) hit a reading of 62.9 – pointing to the sharpest rate of output growth since 1997. Any reading above 50 indicates growth.
The country’s dominant services sector, which includes industries such as retail and hospitality as well as banking, has been battered by successive lockdowns.
Britain’s dominant services sector, which includes industries such as retail and hospitality, has seen consumers flocking back to spend as lockdown restrictions are eased
But in May businesses reported a sharp rise in order volumes, and hired staff at the fastest pace in more than six years.
It came as the latest figures from the Office for National Statistics showed 1.3m fewer workers were having their wages paid by the furlough scheme in March and April, taking the number relying on the taxpayer support to 3.4m.
At the height of the pandemic last year 9m workers in Britain were on furlough.
That is believed to have fallen even further in May.
Chancellor Rishi Sunak said: ‘These figures show the scheme is naturally winding down as people get back to work and take advantage of the opportunities out there in the jobs market.
‘We’ll continue to support those who need it through to September but I am hopeful that we’ll see more people moving back in to work as we continue on the road to recovery.’
Tim Moore, economics director at IHS Markit which compiles the PMI surveys, said: ‘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.’