Services sector 'stutters' with flat growth

Will Green is news editor of Supply Management
5 November 2019

Growth in the UK services sector was flat in October as levels of new and outstanding business fell, according to the latest PMI.

The IHS Markit/CIPS UK Services Purchasing Managers’ Index rose to the neutral 50 reading in October, marking neither contraction nor expansion, up on 49.5 in September.

New work has now declined seven times in the first 10 months of 2019, while the level of outstanding business declined for the 13th consecutive month.

This resulted in another reduction in workforce numbers, with some compulsory redundancies reported.

Cost pressures continued to build at services providers, linked to wages, fuel, energy, foodstuffs and imported items. The rate of input inflation remained above the long-term survey average but eased to an 18-month low. Charges rose on average but at a rate little changed from September’s 38-month low.

In terms of business outlook, 39% of firms expected growth over the coming 12 months, while 16% forecast a decline.

Duncan Brock, group director at CIPS, said: “Without any real expectation for significant change in October, the sector stuttered and stalled delivering a lifeless set of results as new business from domestic and export markets dried up and orders fell for the second month in a row.

“Businesses are putting off their investments for happier times and consumers are saving their pennies in case rising costs have a more severe impact on their daily lives.”

Chris Williamson, chief business economist at IHS Markit, said: “The UK PMI surveys collectively indicated a further overall decline in private sector output in October. Contractions have now been recorded in four of the past five months, marking the worst spell since 2009 during the global financial crisis.”

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