• 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."