Financial News: UK Service Sector Logs Weakest Growth In Almost

UK Service Sector Logs Weakest Growth In Almost A Year

11/05/2024 - 07:29:00 (RTTNews)

(RTTNews) - The UK service sector grew at the slowest pace since November last year as heightened uncertainty and concerns about the domestic economic outlook damped new work, the S&P Global purchasing managers' survey showed on Tuesday.

The final services Purchasing Managers' Index registered 52.0 in October, down from 52.4 in September. The reading was above the initial estimate of 51.8.

The survey showed that firms delayed spending decision due to heightened uncertainty ahead of the Autumn budget. Geopolitical tensions also weighed on willingness to spend.

Total new work grew at the slowest pace since June but still slightly stronger than seen on average in the first of the year. Firms linked improving order books to resilient business and consumer spending.

There was a solid rise in new work from abroad and the rate of expansion accelerated to its fastest since March 2023. Companies reduced staffing numbers for the first time since December 2023. The moderate decrease reflected the non-replacement of voluntary leavers amid budget constraints, efforts to boost productivity and difficulties finding suitable candidates to fill vacancies.

Regarding prices, the survey showed that input cost inflation edged up to a three-month high but remained much softer than seen in the first half of 2024. Average prices charged by service providers increased slightly from September's 43-month low.

Business confidence eased to the lowest in four months. Service providers typically commented on positive sentiment regarding their sales pipelines and broader market conditions but many suggested that political uncertainty ahead of the budget had weighed on sentiment.

The overall private sector output growth moderated further in October, reflecting slower rates of expansion in both manufacturing and service sectors. The composite output index fell to 51.8 from 52.6 in the previous month. The score was the lowest since November 2023. The flash reading was 51.7.

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