- Prior 50.9
- Composite PMI 52.1 vs 51.7 prelim
- Prior 50.7
The good news here is that UK business activity seems to be holding up well in December, with both output and new work rising for a second month running. That being said, employment is a bit of a weak spot while price pressures remain persistently strong in the services sector. Input price inflation moved up to its highest since September and output
price inflation accelerated to its fastest for five months. S&P Global notes that:
“December data indicated that the UK service sector ended
last year on a high, with business activity growth accelerating
to its fastest for six months as the turnaround in order
books gained momentum. The recovery in client demand
was attributed to hopes of lower borrowing costs and an
improving global economic backdrop in 2024. However, many
firms continued to cite challenging underlying business
conditions due to the stagnating UK economy and strong
pressure on margins from rising labour costs.
“Business activity expectations for the year ahead are now
the most upbeat since last May, supported by signs of a
rebound in clients’ appetite to spend. Staff hiring was the
main weak spot in December, with hiring freezes yet to be
lifted as service providers sought to maintain a tight grip on
headcount.
“Strong wage pressures fuelled another month of
substantial input cost increases in the service sector.
Overall input price inflation picked up for the second month
running, despite relief from lower transport bills and raw
material costs.
“Many firms noted constraints on their pricing power due
to squeezed budgets among households and businesses.
However, the latest survey indicated a robust rise in prices
charged across the service economy amid efforts to defend
margins, with the rate of inflation the fastest since last
July.”