With interest rates at a record low and buyers benefitting from the current stamp duty holiday, the property market is going from strength to strength, with both transactions and prices increasing, and it is this improvement that is helping to drive the service sector recovery, according to new figures.
Estate agents and related businesses enjoyed strong growth last month, the latest analysis from the IHS Markit/CIPS’s services purchasing managers’ index (PMI) shows.
The index stood at 56.1 last month, up from just 13.4 at the peak of coronavirus restrictions and lockdown in April. Anything above 50 is considered a sector in growth.
However, September’s reading is down from 58.8 in August, primarily due to the end of the Eat Out To Help scheme.
Chris Williamson, chief business economist at IHS Markit, which compiles the survey, commented: “The UK service sector showed encouraging resilience in September, with business activity continuing to grow solidly despite the government’s Eat Out To Help Out scheme being withdrawn.
“Unsurprisingly, spending in the restaurant sector slumped after spiking higher in August, and many other consumer services activities showed a similar slide back into contraction as renewed lockdown measures were introduced, causing the overall rate of expansion to moderate.”
Despite recent growth, there are signs that optimism in the service sector is starting to cool amid concerns that there could be a second Covid-19 wave, while Brexit uncertainty is also having an adverse impact.
Growth in the service sector has been hindered by tighter restrictions introduced during the past few weeks, while the lack of international tourists is hurting businesses, and this in turn means potential job cuts.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Once again job losses remained the black spot amidst these pockets of recovery.
“With the seventh consecutive monthly drop in job numbers, redundancies have replaced job hiring in an attempt to shield firms from rising input costs, but these strategies will devastate local communities.”