Data published by IHS Markit/CIPS showed that in December, the growth of activity in the private sector in the UK slowed to a 10-month low, which was due to the deterioration of activity in the services sector. Meanwhile, optimism about the prospects for business activity declined for the fourth month in a row, mainly due to a drop in confidence among consumer-oriented service providers. Overall, private sector growth expectations for the next 12 months have reached the lowest since October 2020.
The data showed that the composite PMI index - which reflects activity in the manufacturing and services sectors - fell to 53.2 points from 57.6 points in November. However, the index remained above the level of 50 points, which indicates an expansion of activity in the private sector.
The main reason for the decline in the composite PMI index was the deterioration of activity in the services sector - services PMI fell to 53.2 points in December from 58.5 points in November. Economists had expected a decline to only 57.0 points. The drop in the PMI was caused by the tightening of restrictions on COVID-19 and the resumption of travel restrictions.
Meanwhile, the manufacturing PMI fell to 57.6 points from 58.1 points in November. Economists also expected a decline to 57.6 points. A slight slowdown in activity was caused by a shortage of raw materials and personnel. Meanwhile, overall production growth hit a four-month high in December.