UK service sector employment falls at fastest pace in nearly four years
Business activity in the UK barely grew in December, while employment in the service sector fell at its fastest pace in nearly four years, according to a survey released on Monday.
The S&P Global services PMI business activity index nudged up to 51.1 from 50.8 in November. It was above the 50.0 mark that separates contraction from expansion for the fourteenth month in a row. However, it signalled only a marginal expansion of business activity.
Meanwhile, the PMI composite output index came in at 50.4 in December, down from 50.5 in November and the lowest reading since October 2023.
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.”
Moore said that 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," he said.