Remaining at its two-year low, the sector contracted again in November, but the rate of decline at least did not speed up compared to the month before. The closely-monitored S&P Global/Cips purchasing managers’ index survey scored the service sector 48.8 in November, in line with expectations and unchanged compared to October. They are the joint lowest scores since January 2021. The survey is sent to thousands of businesses and the responses are used to set a score where 50 separates growth from contraction.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “A change of government and its new economic policies may have helped arrest some of the financial market volatility after September’s mini-budget but the economic picture remains stubbornly unchanged. The overall rate of economic contraction has held steady compared to October, indicative of GDP falling at a quarterly rate of 0.4 per cent. As such, this is the toughest spell the UK economy has faced since the global financial crisis excluding only the height of the pandemic.”
The PMI survey showed the amount of new work that service businesses are winning continued to fall, as people cut their spending during the cost of living squeeze. Cost pressures are also continuing to weigh on these companies - they reported that operating expenses once more rose sharply.
John Glen, chief economist at the Chartered Institute of Procurement and Supply (Cips), said: “It looks like supply chain issues for most goods have evened out along with the political landscape giving the marketplace some more stability. But there is no doubt now that the UK is in recession, and consumers are likely to be worried about the cost of living and keeping warm, rather than too much festive fun making in the last quarter of a challenging year all round.”
Williamson added: “Although business confidence in the outlook has lifted from October’s recent low, an overall gloomy mood prevails to restrain business optimism at one of the lowest levels seen over the past decade.”