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The UK private sector expanded for the first time since July, helped by an improving service economy, according to numbers on Tuesday.
The latest S&P Global/Chartered Institute of Procurement & Supply UK services purchasing managers’ index rose to 50.9 points in November, from 49.5 in October. The reading topped the earlier flash estimate of 49.5 points.
The services PMI climbed above the 50.0 mark, which separates growth from decline, to hit the highest level since July.
‘Rising output reflected a slight rise in new orders, but survey respondents continued to report subdued demand and low confidence among clients. Service providers experienced another sharp increase in their average cost burdens, largely due to rising staff wages and elevated inflationary pressures across the broader economy. Efforts to limit the squeeze on operating margins led to the steepest increase in service sector charges since July, although the rate of inflation remained much softer than seen in the first half of 2023,’ survey publisher S&P Global said.
‘Higher levels of business activity were attributed to rising demand, as well as the completion of unfinished projects. Backlogs of work were depleted for the sixth month running and at the fastest pace since August. Service providers again cited lacklustre client spending, partly due to weak business and consumer confidence. Some firms also noted that elevated borrowing costs had weighed on new orders in November.’
The wider composite PMI reading, calculated using a weighted average of the services and manufacturing data, rose to 50.7 points in November, from 48.7 in October. It was the first time since July that the composite PMI has risen above the 50.0 mark.
‘Output growth was confined to the service economy in November. That said, the latest fall in manufacturing production was only marginal and the weakest seen since April,’ S&P Global said.
Friday’s manufacturing PMI rose to 47.2 points in November from 44.8 in October. The reading was below the flash reading of 47.9 points, however.
The services survey features a panel of around 650 firms, with data collected in the second half of the month.
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