The UK’s final services PMI for December 2024 came in at 51.1, lower than the preliminary estimate of 51.4 but still above the prior month’s 50.8. The composite PMI fell slightly to 50.4 from the expected 50.5, signaling a marginal increase in overall business activity.
Key Findings:
- Employment: Declined for the third consecutive month, marking the steepest job shedding pace (excluding the pandemic) in over 15 years. Nearly 25% of surveyed firms reported reductions in payrolls.
- Business Activity: Marginal growth was noted, but new work inflows nearly stalled due to weak business and consumer confidence.
- Input Cost Inflation: Accelerated to an eight-month high, driven by rising payroll costs.
- Business Optimism: Remained subdued, with expectations for 2025 output growth stuck at November’s 23-month low.
Comments from Tim Moore, Economics Director at S&P Global Market Intelligence (via Forexlive):
“The UK service sector ended the year with a slight upturn in business activity, but worries about domestic economic prospects in 2025 weighed heavily on new work inflows. Rising payroll costs and lackluster client budgets were major concerns, leading to subdued growth momentum.
While certain pockets like technology services showed resilience, the broader sector struggled under weak demand and intensifying cost pressures. Input cost inflation reached an eight-month high, while job cuts became more widespread, reflecting cautious hiring strategies amid a gloomy economic outlook.”
