Hotel and restaurant businesses boost UK Services sector

The UK services sector has experienced its best growth for two years, according to a report released this week.

The latest figures from the Project Management Institute (PMI) showed that firms offering hospitality, such as hotels, restaurants and catering businesses, have made key contributions to this increase.

It is thought that hotels, in particular, have benefited from the weakness of sterling, with an increasing numbers of tourists from Europe looking to take advantage of the fall in the pound. A survey conducted by the Good Hotel Guide 2010 also showed that 50% of small hotels feel they have had an excellent year.

Although the Services Sector appears to be on the increase, there is little evidence to suggest that this is reflective across the market in general. For instance, sub-sectors of the market like transport, communication, cleaning and hair-dressing are all still in decline.

Colin Ellis, European economist at Daiwa Securities SMBC, stated that although the services figure from last month has pushed the whole economy up, this is only having a marginal effect due to the disappointing figures from the manufacturing industry.  As a result of this, the economy is only up by 0.1 on last month.

Chief analysts largely expect the UK's economic recovery to be a slow process. One recent area of concern is that consumer spending will see a drop in January 2010 as the 15% ‘VAT holiday' comes to a close.

13/10/09