UK service sector expands at fastest pace in six months

(Sharecast News) - Activity in the UK service sector rose at the fastest pace in six months in December, according to a survey released on Thursday. The S&P Global/CIPS services PMI business activity index increased to 53.4 from 50.9 in December, coming in above the flash reading of 52.7. A reading above 50.0 signals expansion, while a reading below indicates contraction.

Meanwhile, the final composite PMI - which measures activity in both the service and manufacturing sectors - came in at 52.1 in December, up from 50.7 the month before. This also marked the highest level since last June and was above the flash estimate of 51.7.

Tim Moore, economics director at S&P Global Market Intelligence, said: "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."