November 6, 2023
According to survey data issued by S&P Global and the Chartered Institute of Procurement & Supply, the UK service sector dropped for the third consecutive month in October due to cost of living pressures, high borrowing rates, and weak consumer mood.
The services Purchasing Managers’ Index increased from 49.3 in September to 49.5 in October. 49.2 was the flash reading. Despite a rise, a score of less than 50.0 indicated a contraction in the sector.
According to the report, negative domestic economic conditions and tight household budgets stifled new company chances. The most recent drop in new jobs was the fastest since November 2022.
In contrast, new work from outside surged in October, supported by an uptick in demand from clients in the United States and the Middle East.
Unfinished work volumes fell further, indicating that service providers had enough capacity to fulfill new and existing workloads.
Employment fell marginally as a result of non-replacement of leavers amid sluggish sales and concerns about the demand outlook.
The level of optimism among service providers has fallen to its lowest level since December 2022, owing to lower discretionary income and sluggish business investment trends.
Input price inflation has continued to fall. Since February 2021, the overall rise in company expenses has been the smallest. However, the average price charged by service providers was the lowest in three months.
“A shallow downturn in UK service sector activity persisted in October as businesses struggled to make headway against a backdrop of worsening domestic economic conditions and stretched household budgets,” said Tim Moore, Economics Director at S&P Global Market Intelligence.
The survey revealed that the pace of contraction in the overall private sector economy slowed in October. The corresponding index posted 48.7, up from an eight-month low of 48.5 in September. The flash score for October was 48.6.
Source: RTT NEWS
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