Services sector grows

Activity in the services sector grew at the fastest rate for nearly 18 months on the back of new business, a survey has found.

The Chartered Institute of Purchasing and Supply (CIPS) and consultancy Markit’s monthly report found that July saw the sector make its fastest gains in activity since February 2008 after hitting record lows last November.

However companies were still reducing their prices and shedding staff after 16 months of job losses.

Many companies responding to the survey said they could see an end to the recession as the wider economy improved.

But some clients remained cautious about spending large sums of money.

David Noble, chief executive of the CIPS, said job losses and price cuts were likely to continue until the end of the year. He added: “Employment will, from a longer term perspective, recover at a slower rate than business activity.”

Paul Smith, senior economist at Markit Economics said: “Subsequent pressure on household finances points to continuing fragility in demand, and remains the key concern over the sustainability of the recovery.”