UK service economy falters, outlook weakens - PMI
Business optimism across UK service providers sank to a two-year low in November, a closely-watched survey showed on Wednesday, on mounting concerns about higher costs.
The final S&P Global UK services PMI business activity index came in at 50.8 in November. While still in positive territory, it was down on October’s 52.0 and the lowest reading for 13 months.
A reading above the neutral 50.0 benchmark indicates growth, while one below it suggests contraction.
Respondents cited heightened economic uncertainty and concerns about tax-raising measures announced in the October Budget.
Business optimism, meanwhile, fell to its lowest level since December 2022.
Tim Moore, economics director at S&P Global Market Intelligence, said: "Business activity was close to stalling in November.
"Weaker sales pipelines, cutbacks to new projects and more caution among clients were all cited as having an adverse impact on output.
"There was a considerable reduction in business optimism across the service economy. Worries about the impact of policies announced in the Budget, in particular those pushing up employment costs, were widely reported as leading to a gloomier assessment of business investment prospects and the broader UK economic outlook."
However, Matt Swannell, chief economic advisor to the EY Item Club, said: "The results can be heavily affected by swings in business sentiment, and don’t always show genuine trends in activity.
"With November’s survey the first since the Budget, the EY Item Club thinks sentiment is likely to have played an outsized role in driving [these] results. Indeed, there is still a good chance that quarterly GDP growth is a bit stronger in the fourth quarter than the third."