According to the report from IHS Markit/CIPS, the growth of activity in the service sector slowed sharply in December, which was due to the spread of the Omicron coronavirus strain, which caused a drop in spending on personal consumer services, disruptions in work and increased business uncertainty.
UK Services PMI fell to 53.6 points in December from 58.5 points in November. The last value was the lowest since February 2021. However, the index exceeded the forecast - economists expected a drop to 53.2 points - and remained in the territory of expansion (above 50 points) for the 10th month in a row.
Meanwhile, employment continued to grow at a steady pace, and production expectations improved. However, many companies engaged in tourism, recreation and hotel business have indicated a decline in activity due to the tightening of pandemic restrictions.
The data also showed that the growth of new orders was the weakest since March, while export orders declined at the fastest pace since February amid renewed travel restrictions. Meanwhile, the growth in outstanding orders was the weakest since March, while average production costs recorded another sharp increase against the background of higher prices for energy, fuel, transport and raw materials. However, against the background of strong employment growth, there was a further improvement in expectations about activity in the coming year.