Data released by S&P Global/CIPS showed that activity growth in the UK private sector slowed slightly in December, reaching its lowest level since October 2023.
The UK composite PMI fell to 50.4 points from 50.5 points in November. Economists had expected the index to remain unchanged. Meanwhile, the services PMI rose to 51.1 points from 50.8 points in November. Consensus estimates suggested growth to 51.4 points. Both indices remain above the 50-point mark, which indicates an expansion of activity in the sector, for the 14th month in a row.
The report showed that total new orders were close to stagnation across the service economy - the respective index was the lowest since October 2023. This result was associated with a drop in customer confidence after the autumn budget, especially due to upcoming increases in employers' National Insurance contributions. Meanwhile, export orders fell for the first time since September 2023. Survey respondents commonly reported lower orders from EU clients, while some noted a boost from strong demand in US markets. Weak demand and higher payroll costs led to the steepest decline in service sector employment since January 2021. The latest increase in input prices was the fastest since April 2024, while the overall rate of prices charged inflation hit a six-month high and remained well above the pre-pandemic average. Meanwhile, the degree of positive sentiment regarding growth prospects during the year ahead was unchanged from the 23-month low recorded in November.