(Alliance News) - The UK service sector saw growth ease to the most tepid pace for around a year, survey results on Wednesday showed, amid worries about tax hikes delivered in the October budget.
The S&P Global services purchasing managers' index fell to 50.8 points in November, from 52.0 in October. Moving closer to the 50 point no change mark, the data suggests growth eased. It was still loftier than the flash estimate, which put the PMI at the 50 point neutral threshold.
November's PMI reading was the weakest in 13 months.
"Although indicative of a slight increase in business activity, the rate of growth was the slowest since the current phase of expansion began in November 2023. Many service sector firms noted a growth headwind due to heightened economic uncertainty and concerns about tax raising measures announced in the autumn budget," S&P Global said.
The UK government budget announcement at the end of October included a number tax increases for companies.
"New business volumes increased for the thirteenth successive month in November, which was partly attributed to resilient consumer spending. The rate of expansion was only modest, however, and the weakest recorded since the pre-election slowdown seen in June. Some firms suggested that new projects and investment plans had been put on hold amid worries about the business outlook."
New work from customers abroad rose at a weaker pace last month, despite "some reports of strengthening demand from US clients".
S&P Global analyst Tim Moore commented: "UK service providers indicated that business activity
was close to stalling in November, with growth easing to its slowest for over a year. Weaker sales pipelines, cutbacks to new projects and more caution among clients were all cited as having an adverse impact on service sector output.
"Softer new business expansion and forthcoming rises in employers' national insurance contributions weighed heavily on staff recruitment, according to survey respondents. Total workforce numbers dipped for the second month running, with many firms noting that pressure on margins from higher payroll costs had led to the non-replacement of departing staff."
The wider composite PMI, which includes the services data and an earlier reading of the manufacturing economy, eased to 50.5 points in November, from 51.8 in October. The reading topped the flash estimate of 49.9, however.
S&P Global added: "[It] registered above the neutral 50.0 threshold for the thirteenth successive month. However, the rate of business activity expansion was only marginal and the weakest seen over this period. A renewed downturn in manufacturing production, combined with softer service sector growth, contributed to another loss of momentum for overall private sector activity."
Numbers on Monday showed the UK manufacturing sector endured a sharper decline than expected last month.
Survey respondents also pointed to a delay in some investment decisions, by both manufacturers and customers, after the UK budget.
The S&P Global UK manufacturing PMI fell to a nine-month-low of 48.0 points in November from 49.9 in October. The final reading was below the flash estimate of 48.6 points.
The services PMI survey features a panel of 650 firms. Responses were collected between November 12 and 27.
By Eric Cunha, Alliance News news editor
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