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UK Service Sector Contracts Further In November


The UK service sector logged a further modest deterioration of activity in November, as new business continued to fall amid ongoing economic uncertainty and low purchasing power of consumers, final data from S&P Global showed Monday.

The Chartered Institute of Procurement and Supply final services Purchasing Managers’ Index came in at 48.8 in November, unchanged from October. The flash score was 48.8.

Further, the index still remained at its lowest level since January 2021.

A score above 50 indicates expansion, while a reading below 50 suggests contraction in the sector.

A concurrent decline in new sales volumes was once again cited as the cause of the decline by firms, as businesses and households tightened their belts in response to continued inflation.

Sales fell for the third straight month, and were at their lowest since January 2021’s lockdown. New export orders also fell for the third straight month, though marginally.

On the price front, input price inflation accelerated in November from October’s 13-month low, linked to higher expenses for utilities, food, and fuel, along with higher wages and salaries. However, charge inflation eased to a ten-month low on mounting competitive pressures and weaker demand conditions.

Looking ahead, output expectations improved somewhat in November. Nonetheless, firms are concerned about the possibility of recession and the impact of rising costs on their business, resulting in historically subdued sentiment.

The composite output index remained in negative territory for the fourth successive month in November, remaining stable at 48.2. Service sector business activity continued to fall modestly, whilst manufacturing output fell at a slightly faster pace.

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