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Highlights
- The private sector recorded an acute slowdown in the month of August due to supply chain issues and staff crunch.
- IHS Markit and CIPS' latest PMI flash data found that crunch in essential components and raw materials pushed up purchasing prices.
- For August, the adjusted IHS Markit/CIPS Flash UK Composite Output Index reading came at 55.3, falling from 59.2 in July.
The private sector recorded an acute slowdown in the month of August as companies found it difficult to carry out operations due to supply chain issues and staff crunch.
According to IHS Markit and CIPS' latest PMI flash data, crunch in essential components and raw materials also contributed in pushing up purchasing prices. This has resulted in goods producers recording a sharp fall in supplier performance since April last year.
Both manufacturing and service sector saw weaker recoveries. The service sector recorded the steepest momentum loss since July. For August, the adjusted IHS Markit/CIPS Flash UK Composite Output Index reading came at 55.3, falling from 59.2 in July. The index fell for the third month straight.
Respondents to the survey said that instances of output shortage due to raw material or staff crunch was more than fourteen times the usual and also the largest since 1998 when the survey began.
Stronger export sales helped to offset the slowdown seen in the recovery of domestic demand. According to Markit, inflationary pressure eased in August and prices of inputs jumped at the weakest pace for three months.
Here is a look at four speciality services stocks and how they reacted to the index on 23 August:
Rentokil Initial Plc (LON:RTO)
The British services group’s shares closed lower at GBX 579.00 on 23 August. The shares of the FTSE 100 company have a market capitalisation of £10,765.54 million. They have a one-year return of 9.63 per cent and a year-to-date return of 13.93 per cent.
For the first half of 2021, the company’s revenue grew 18 per cent to £1,462.7 million. Profit before tax grew by 146.4 per cent to £148.8 million. For the full year, the company expects an increase in adjusted pre-tax profit by about £10 million to £15 million.
Homeserve Plc (LON:HSV)
The home emergency repairs company’s shares ended lower at GBX 924 on 23 August. The shares of the FTSE 250 company have a market capitalisation of £3,108.07 million. It has a dividend yield of 2.83 per cent.
In a trading update for the 1 April to 15 July 2021 period, the company said that product usage remained robust throughout the business. Consumer usage in Home Experts and claims frequencies in Membership continued to remain high. It said that the company was on track to achieve profitability in this financial year.
Serco Group Plc (LON:SRP)
The shares of the essential public services company ended lower at GBX 134.80 on 23 August. The shares of the FTSE 250 company have a year-to-date return of 12.80 per cent and a price-to-earnings ratio of 5.69.
For the first half of 2021, the company’s revenue increased by 19 per cent to £2,168 million from £1,822 million in the same period a year ago. Reported operating profit increased 31 per cent to £116 million from £89 million a year ago.
Fisher (James) & Sons Plc (LON:FSJ)
Shares of marine engineering services company closed at GBX 954 on 23 August. They have a market capitalisation of £483.80 million.
In a trading statement for the first quarter of this year, the company said it’s performance was in line with management expectations for the quarter, generally the Group’s weakest. Revenue for the period was seen at £109.3 million, compared to £129.4 million a year ago.
