- Final Services PMI 51.1 vs 51.4 expected and 50.8 prior.
- Final Composite PMI 50.4 vs 50.5 expected and 50.5 prior.
Key Findings:
- Employment declines for the third month in a row.
- Marginal increase in business activity.
- Input cost inflation accelerates to an eight-month high.
Comment:
Tim Moore, Economics Director at S&P Global Market Intelligence, said:
"The service sector ended last year with only a marginal upturn in business activity and a near-stalling of incoming new work. Survey respondents suggested that falling business and consumer confidence, largely due to worries about domestic economic prospects in 2025, had led to a considerable loss of growth momentum. While most parts of the UK service economy noted weak demand and cutbacks to client budgets, there remained pockets of strong growth in areas such as technology services.
A post-Budget slump in business optimism persisted in December, with output growth expectations for the year ahead unchanged from November's 23-month low. Concerns about the impact of rising payroll costs, alongside a general unease about the climate for business investment, were reported as the main factors weighing on prospects for growth in 2025.
Rising input price inflation added to the gloomy near- term outlook for service providers, with overall cost pressures reaching an eight-month high in December. Prices charged inflation meanwhile intensified at the end of last year and remained well in excess of pre-pandemic trends.
Faced with subdued demand conditions and hikes to employment costs, many service providers opted to curtail their staff hiring and delay backfilling roles in December. Nearly one-in-four survey respondents saw an overall decline in their payroll numbers. Excluding the pandemic, this represented the steepest pace of job shedding for more than 15 years."
