The UK service sector output declined only moderately in February after a sharp downturn at the start of 2021, as the third national lockdown has caused limited damage to the economy, results of a closely watched survey showed on Wednesday.
The IHS Markit/Chartered Institute of Procurement & Supply final services Purchasing Managers’ Index rose to 49.5 in February from an eight-month low of 39.5 in January. The flash score was 49.7.
The score has been below the crucial 50.0 no-change mark in each month since November 2020, but the latest reading signaled the slowest decline in service sector output over this period.
“The dominant services sector bounced back in February and though remained in the contraction zone, presented a more positive picture than at the start of the year,” Duncan Brock, group director at CIPS, said.
New business fell only slightly in February. Nonetheless, Brexit-related difficulties held back sales. At the same time, new work from abroad continued to fall sharply.
A lack of forward-bookings and reduced pressure on business capacity contributed to another decrease in backlogs of work.
Staffing levels decreased at the slowest pace since the Covid-19 pandemic first hit employment numbers last March, the survey showed.
Average cost burdens increased sharply in February. Input price inflation was the strongest for twelve months, with higher fuel bills and greater shipping costs. Output charges also increased at a faster rate in February.
Vaccine roll out progress and confidence about the prospect of looser restrictions on trade resulted in a fourth consecutive monthly rise in business expectations across the service economy.
The survey showed that the gap between manufacturing and service sector performance narrowed considerably in February.
The composite output index advanced to 49.6 in February from 41.2 in January but was below the preliminary score of 49.8.
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