The services sector has seen activity slow to a five-year low, with business confidence in the hotel and restaurant industry the worst affected, according to new figures. The Chartered Institute of Purchasing and Supply’s (CIPS) purchasing managers index fell to 50.4 in April, down from 52.1 in February, which was the lowest reading since March 2003. The monthly report on the sector highlighted that purchasing managers had seen a combination of factors, including a fall in orders, rising utility and food costs and a restriction on pricing power affecting their margins and leading to a fall in business confidence. Roy Ayliffe, director of professional practice at CIPS, said: “Purchasing managers in the UK services sector really struggled to protect their firms. New orders fell; energy, fuel and food costs soared and pricing power was restricted amid further deteriorating economic conditions. “These factors led to a depression in business confidence, particularly among hotels and restaurants, as well as financial services companies, who have been most directly affected by the credit crunch.” The research also showed that companies had found it difficult to pass rising input costs onto consumers due to competitive pressures and weakened demand.