Service sector

Services sector growth slows slightly as business optimism hits year low

UK service sector growth slowed slightly in November and industry sentiment fell to a 12-month low amid staff shortages and supply chain pressure, according to new numbers.

However, the statistics also showed the industry continued its recovery, with companies reporting the fastest rise in new business in the past five months.

The closely watched IHS Markit CIPS UK Services PMI survey recorded a reading of 58.5 last month, down from 59.1 in October.

A score above 50 is considered to indicate growth.

Businesses surveyed said consumer spending has yet to be affected by inflationary pressures or concerns over recent supply issues.

He added that new orders rebounded as new trade from overseas grew at its fastest pace since 2017.

Tim Moore, chief economics officer at IHS Markit, said: “Soaring pricing pressures have done little to reduce business and consumer spending across the UK economy, according to the latest PMI data.

“New order growth hit a five-month high in November, job creation remained strong and backlogs built up due to supply issues.

“The overall speed of the recovery appears to have accelerated compared to the third quarter of 2021, with production growth mainly driven by services as manufacturers grapple with severe shortages of raw materials and critical components.”

However, business expectations were dampened by supply issues in the services sector as “the level of optimism about growth in business activity was at a 12-month low.”

The report also notes that prices charged by service-sector businesses rose at a record pace in November.

Meanwhile, businesses continued to point to strong demand for staff in November, with the number of jobs rising for the ninth consecutive month.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply (CIPS), said: “This continued demand was fueled by a slight recovery in supply chain performance in some quarters and travel opportunities arising. are open for more business.

“Companies wanted to improve their capacity because hiring levels were maintained even as job seekers kept the upper hand in terms of choice and salary increases.”