UK Services Activity Maintains Modest Expansion

(RTTNews) - The UK service sector continued to expand at a moderate pace in February despite a faster decline in new orders, the S&P Global purchasing managers' survey showed on Wednesday.

The final services Purchasing Managers' Index increased slightly from 51.0 in February to 50.8 in January, below the flash reading of 51.1. A score above 50 indicates expansion, while any reading below suggests contraction in the sector.

New business fell at the fastest pace since November 2022, mainly attributed to cutbacks to business investment among clients, heightened economic uncertainty, and ongoing headwinds to discretionary consumer spending.

Export sales also declined at the steepest pace since December 2021 amid weak demand across Europe.

On the price front, input price inflation eased due to weaker pricing power and intense competitive pressures.

Service providers were reluctant to raise their workforce numbers in February as a result of a combination of lackluster demand and rising payroll costs. Further, the rate of job shedding was the fastest since November 2020.

Looking ahead, British service providers remained positive about their business activity over the next twelve months. Nonetheless, the degree of confidence slipped to the lowest since December 2022 on the impact of rising payroll costs, subdued market conditions, and geopolitical uncertainty.

The composite output index came in at 50.5 in February, down from 50.6 in January, indicating a slowdown in the UK private sector activity. Higher levels of service sector activity more than offset a solid reduction in manufacturing production.