The UK service sector expanded for the first time in four months in November as demand conditions stabilized and staffing returned to growth amid moderate improvement in expectations for the year ahead, final survey results from S&P Global revealed Tuesday.
The final Chartered Institute of Procurement & Supply services Purchasing Managers' Index advanced to 50.9 in November from 49.5 in October. The flash reading was 50.5.
The score was above the 50.0 no-change value for the first time in four months signaling expansion in the service sector.
Higher level of activity was attributed to rising demand and the completion of unfinished projects. Backlogs of work were depleted for the sixth straight month.
Nonetheless, there was only a marginal rise in new orders. Firms cited weak business and consumer confidence as well as higher borrowing cost for subdued spending.
Exports increased in November, especially due to higher demand from the U.S.
Reflecting positive trends in activity and incoming new orders, companies raised staffing levels. The slight increase in employment contrasted with a marked downturn in September. Business optimism edged up in November but remained softer than the average in the first half of 2023.
Average cost burdens increased in November but the rate of inflation was the second-lowest since March 2021.
However, output charge inflation was the strongest since July despite firms reporting stretched client budgets and limited pricing power.
The overall private sector output ended a three-month sequence of moderate contractions in November.
The final composite output index rose to 50.7 from 48.7 in the previous month. The score was slightly above the flash 50.1.
Elsewhere, data from the British Retail Consortium showed that households held back on Christmas spending.
The total retail sales logged a slower growth of 2.7 percent in November compared to 4.2 percent increase in the same period last year.
Food sales increased 7.6 percent, while non-food sales dropped 1.6 percent from the last year.
"Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November," Helen Dickinson, chief executive of the BRC, said.
"While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending," Dickinson added.
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