UK February final services PMI 51.0 vs 51.1 prelim

• Prior 50.8
• Composite PMI 50.5 vs 50.5 prelim
• Prior 50.6

Despite the fastest decline in new work since November 2022, UK services sector still managed to clock in a growth in output. But despite the seemingly positive showing, there is some concern when it comes to employment conditions. The latest fall there is the sharpest since November 2020, linked to softer demand and also rising input prices. That’s not a good look on how labour market conditions are holding up in the past few months. S&P Global notes that:

“UK service providers achieved another modest
increase in overall business activity during February,
thereby extending a run of expansion that stretches
back to November 2023. However, there has been a
clear loss of growth momentum since last autumn and
the survey’s forward-looking indicators continue to
suggest an elevated risk of stagflation on the horizon.

“Demand conditions softened in both domestic and
export markets, with total new work falling to the
greatest extent for just under two-and-a-half years.
Business services were hit by cutbacks to investment
spending among clients and delayed decision-making
due to broader geopolitical headwinds. Consumer
service providers meanwhile noted constrained
discretionary spending and pressure on household
budgets from rising living costs.

“Worries about the near-term economic outlook and the
impact of rising payroll costs contributed to another
slide in business optimism. The overall degree of
confidence regarding year ahead growth prospects was
the lowest since December 2022.

“Less upbeat business expectations and another
month of sharply rising input prices led to net job
shedding across the service economy in February.
Employment has now decreased for five months in
a row. Aside from the pandemic, this represents the
longest period of falling employment since early-2011.”

This article was written by Justin Low at www.forexlive.com.