UK December final services PMI 53.6 vs 53.2 prelim

• Composite PMI 53.6 vs 53.2 prelim

That’s the lowest reading since February for services activity as pandemic restrictions weighed heavily. That said, there are some positives as job creation remains robust and growth expectations are also still more positive. Roughly 55% of
the survey panel anticipate a rise in activity during 2022, while only 10% forecast a decline. Markit notes that:

“December data revealed a severe loss of momentum for the
UK economy as many customer-facing businesses experienced
a drop in demand due to escalating COVID-19 cases. Total new
orders in the service sector increased at the weakest pace for
10 months. Mass cancellations of bookings in response to the
Omicron variant led to a slump in consumer spending on travel,
leisure and entertainment. Survey respondents also noted that
renewed pandemic restrictions had slowed the recovery in
business services.

“Despite concerns that economic growth has weakened as
we head into the New Year, service providers signalled strong
confidence about the longer-term business outlook. Around
55% of the survey panel anticipate a rise in output during
2022 as a whole, while only 10% expect a decline. The degree
of optimism has held steady since the autumn, suggesting
that most businesses are forecasting only a temporary hit to
demand from the Omicron variant.

“The inflation outlook appeared to improve as input prices
increased at the slowest pace for three months. Survey
respondents again commented on considerable pressure from
energy, fuel and staff costs. Output charge inflation eased
only slightly from November’s record high, however, as many
businesses cited the need to pass on escalating costs to clients
over the course of 2022.”