Data released by S&P Global/CIPS showed that activity growth in the UK private sector accelerated slightly in January, reaching the highest level since October 2024. Employment has fallen at the fastest pace since November 2020, reflecting subdued demand conditions and ongoing efforts to mitigate higher payroll costs. Meanwhile, overall input price inflation hit an 18-month high in January
The UK composite PMI rose to 50.6 points from 50.4 points in December. Economists had expected the index to increase to 50.9 points. Meanwhile, the services PMI fell to 50.8 points from 51.1 points in December. Consensus estimates suggested growth to 51.2 points. Both indices remain above the 50-point mark, which indicates an expansion of activity in the sector, for the 15th month in a row.
The report showed that total new work decreased slightly in January, ending a 14-month period of sustained expansion. While some service providers commented on the impact of global economic uncertainty and elevated interest rates, many firms also linked lower new orders to weaker business confidence in the wake of the Autumn Budget. Export orders decreased for the second month running, albeit to a lesser extent than in December. Resilient demand from US clients was reportedly offset by lacklustre spending across Europe. Meanwhile, the latest decline in unfinished work was the sharpest since August 2023. Employment in the service sector fell again in January (for the 4th month in a row), with the rate of job shedding accelerating to its fastest since January 2021. As for the inflationary situation, the latest increase in input prices was the fastest since April 2024, while the prices charged by service sector firms increased to the greatest extent for 13 months. The latest survey indicated the lowest degree of optimism regarding the year ahead outlook for service sector business activity since December 2022.