- Composite PMI 53.6 vs 53.2 prelim
That's the lowest reading since February for services activity as pandemic restrictions weighed heavily. That said, there are some positives as job creation remains robust and growth expectations are also still more positive. Roughly 55% of the survey panel anticipate a rise in activity during 2022, while only 10% forecast a decline. Markit notes that:
“December data revealed a severe loss of momentum for the UK economy as many customer-facing businesses experienced a drop in demand due to escalating COVID-19 cases. Total new orders in the service sector increased at the weakest pace for 10 months. Mass cancellations of bookings in response to the Omicron variant led to a slump in consumer spending on travel, leisure and entertainment. Survey respondents also noted that renewed pandemic restrictions had slowed the recovery in business services.
"Despite concerns that economic growth has weakened as we head into the New Year, service providers signalled strong confidence about the longer-term business outlook. Around 55% of the survey panel anticipate a rise in output during 2022 as a whole, while only 10% expect a decline. The degree of optimism has held steady since the autumn, suggesting that most businesses are forecasting only a temporary hit to demand from the Omicron variant.
"The inflation outlook appeared to improve as input prices increased at the slowest pace for three months. Survey respondents again commented on considerable pressure from energy, fuel and staff costs. Output charge inflation eased only slightly from November's record high, however, as many businesses cited the need to pass on escalating costs to clients over the course of 2022."