The UK’s service sector recovery gained momentum last month as restrictions on Omicron coronaviruses and the number of cases fell, new figures show.
The closely watched IHS Markit CIPS UK Services PMI survey scored 54.1 in January, rebounding from a 10-month low of 53.6 in December.
Any score above 50 indicates growth in the sector.
The latest data showed activity in the sector improved during the month as Plan B restrictions and concerns about the spread of the Omicron variant of Covid-19 eased.
Duncan Brock, group director at the Chartered Institute of Procurement and Supply (CIPS), said: “There were positive results in the January results.
“Business activity has picked up across the largest sector of the UK economy as customer footfall has improved and Omicron restrictions have been lifted and removed.
“The improvement was slight but brought better news from the previous month’s declines, with an increase in new business and some additional orders coming in overseas.”
Firms surveyed said new business growth “has accelerated sharply as term bookings have been boosted by the easing of Omicron-related disruptions.
Export sales also rebounded at the start of the year, with companies pointing to increased demand from China and the United States.
However, companies also reported stronger cost pressures at the start of 2022.
Tim Moore, chief economics officer at IHS Markit, said: “Record price increases in the service economy are set to worsen the cost of living crisis for UK households.
“Input cost inflation accelerated again in January, and service providers responded by raising their invoice prices at the fastest rate since the index began in July 1996.”
Longer wait times to recruit new staff and widespread staff absences due to Covid-19 cases also contributed to a further increase in backlogs in the sector in January.