UK Services Activity Nears Stagnation In November

(RTTNews) - The UK service sector grew at the slowest pace in a year as business activity and new orders rose at weaker rates, the S&P Global purchasing managers' survey showed on Wednesday.

The final services Purchasing Managers' Index dropped to 50.8 in November from 52.0 in October. The reading was above the initial estimate of 50.0. A score above 50 indicates expansion, while any reading below suggests contraction in the sector.

The survey revealed that the current growth headwind is due to heightened economic uncertainty and concerns about tax-raising measures announced in the Autumn Budget.

The increase in new business volumes was only marginal in November. Firms kept new projects and investment plans on hold amid worries about the business outlook. Similarly, new export business also rose at a weaker pace.

Employment levels dropped slightly as firms encouraged hiring freezes and the non-replacement of voluntary leavers due to strong wage pressures and forthcoming increases in employers' National Insurance contributions.

Looking ahead, expectations about future output remained positive, but the degree of confidence dropped sharply since October to the lowest for 23 months. This was mainly linked to worries about higher payroll costs and subsequent declines in business investment.

The composite output index fell to 50.5 in November from 51.8 in October, indicating a marginal expansion in the British private sector amid a renewed downturn in manufacturing production along with softer service sector growth.