March saw the steepest downturn in the UK services sector in more than two decades due to business shutdowns and cancelled orders, according to the latest PMI.
The IHS Markit/CIPS UK Services Purchasing Managers’ Index slumped to 34.5 in March, down on 53.2 in February and against the no-change reading of 50.
The drop exceeded the previous record low seen at the height of the global financial crisis and marks what has been by far the fastest downturn in the sector since the survey began in 1996.
Only the technology services subcategory managed to buck the trend, recording pockets of continued business expansion.
Blame was overwhelmingly attributed to a slump in business and consumer spending amid emergency public health measures brought in against the coronavirus outbreak over the last two weeks.
And international travel restrictions and widespread business closures across Europe meant that new business from abroad fell rapidly.
Many respondents said existing projects had been placed on hold and new enquiries from abroad had dried up completely.
Employment fell for the first time in five months and at its fastest since June 2009.
Falling fuel prices and efforts to reduce non-essential expenditure meant that average cost burdens increased at the slowest pace for just over four years in March.
Prices charged by service sector companies fell at their steepest since August 2009.
Duncan Brock, group director at CIPS, said the services sector had been “sucked into a black hole and flung into the unknown by the forceful impact of the Covid-19 coronavirus, affecting every area of supply chains from transport to purchasing levels and job creation.
“Export orders were hit particularly hard and, in some cases, dissolved into nothing as border closures and travel restrictions resulted in the immediate cessation of normal business activities.”
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