Service sector returns to growth after months of malaise
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The UK’s service sector broke a three-month losing streak last month, data from an influential survey has suggested.
The S&P Global/CIPS UK services PMI survey showed a reading of 50.9 in November, up from 49.5 in October.
As well as being higher than the month before, the figure was also ahead of the 50.5 that economists had expected, according to a consensus figure supplied by Pantheon Macroeconomics.
Any score above 50 indicates that the sector is growing.
UK service providers moved back into expansion mode during November as stabilising demand conditions helped to lift business activity from its recent malaise
Tim Moore, economics director at S&P Global Market Intelligence, said: “UK service providers moved back into expansion mode during November as stabilising demand conditions helped to lift business activity from its recent malaise.
“Although only marginal, the upturn in service sector output was the fastest since July and slightly stronger than the earlier ‘flash’ estimate for November.”
But service companies are still seeing significant cost rises, largely because of increases in staff wages.
But strong exports to the US and elsewhere helped the sector. These included sales to European customers, despite the frictions that companies said have been caused by Brexit.
A softening in the headline rate of inflation and improved raw material prices set the scene for some clients to commit to new work
Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS), said: “Amongst the general malaise in customer confidence impacting on demand, there was the biggest rise in new orders since July and export orders since August.
“A softening in the headline rate of inflation and improved raw material prices set the scene for some clients to commit to new work, while the remainder stayed mostly cautious until there were stronger improvements in the UK economy.”
He added: “There was also an end to the job losses recorded by service businesses every month since September, so this could be another signal that this is the start of a more sustainable revival for 2024.”
