Services sector growth slows as price inflation falls to near five-year low

Growth in the UK services sector slowed last month amid softening consumer demand, according to new data.

Meanwhile, price inflation in the region fell to its lowest level in nearly five years.

S&P Global UK Services PMI The survey found a reading of 51.3 in November, down from 52.3 in October.

Any reading above 50.0 means the sector is growing while any score below means it is shrinking.

The closely watched survey was stronger than expected, with analysts forecasting a 50.5 reading for the month.

tim mooreThe economics director of S&P Global Market Intelligence said: “November data showed that the steady improvement in order books seen since the summer has come to an abrupt end.

“Adverse demand conditions were indicated in both domestic and export markets.

“While reduced workloads led to a fresh slowdown in business activity growth in the UK services economy, the latest expansion is much softer than the post-pandemic trend.”

The survey data showed a slowdown in growth as services sector companies commented on “growth hampered by sluggish business and consumer confidence”.

Companies particularly noted that there is uncertainty ahead Budget Last week resulted in delays in investment decisions and caution in spending.

Order books also declined over the month due to a “lack of willingness” to commit to new projects, the research found.

Firms also highlighted that a reduction in the backlog of work and higher employment costs contributed to a further decline in the number of employees, the sharpest decline since February.

Elsewhere, data showed the prices charged by companies in the sector fell sharply as companies tried to compensate for the drop in demand.

inflation The price charged slowed to its lowest level since January 2021.

Matt Swannell, Chief Economic Advisor EY Item ClubSaid: “The survey was conducted ahead of the Autumn Budget and concerns about potential tax rises weighed on business sentiment.

“The worsening growth outlook along with easing cost and price pressures is paving the way for an interest rate cut ahead of the Christmas holidays.

“Although interest rates were left unchanged at the Bank of England’s November meeting, the decision was very balanced and it was clear that the majority of the committee anticipated further lowering of interest rates.”