The latest survey from S&P Global/CIPS showed that business activity in the private sector has not changed compared to November, when a 13-month low was reached. Meanwhile, total new orders declined for the first time in 13 months amid widespread reports of weaker business and consumer spending patterns
The UK composite PMI remained at 50.5 points in December. Consensus estimates suggested an increase to 50.7 points. An index value above 50 points indicates an expansion of activity in the sector. However, the rate of business activity expansion remained much weaker than seen in the first half of the year (average index reading of 53.0). The services PMI rose to 51.4 points (2-month high) from 50.8 points in November, while the manufacturing PMI fell to 47.3 points (11-month low) from 48.0 points. Economists had expected the services PMI to rise to 51.0 points and the manufacturing PMI to be 48.2 points.
Data showed a slight decline in total new work across the private sector economy, which ended a 12-month period of expansion. This was led by a steep and accelerated decrease in new orders in the manufacturing sector. Meanwhile, overall export sales recorded the fastest reduction since October 2023. Volumes of unfinished work fell for the twentieth consecutive month and at the sharpest rate since November 2023. Reduced backlogs were typically attributed to a lack of pressure on business capacity, with declines recorded in both the manufacturing and service sectors. Meanwhile, total private sector employment declined again in December, with the rate of job shedding being the fastest for almost four years. Business activity expectations for the year ahead reached the lowest level since December 2022, largely due to an ongoing slide in service sector confidence.
As for the inflationary situation in the private sector, the rate of input price inflation accelerated for the second month running to its strongest since April, while the average prices charged increased at the steepest pace for nine months, led by a robust and accelerated rise in the service economy.