The UK private sector contracted less than initially estimated in November despite a second lockdown, final data from IHS Markit showed Thursday.
The Chartered Institute of Procurement & Supply/IHS Markit services Purchasing Managers’ Index dropped to 47.6 in November from 51.4 in October. However, the score was above the flash reading of 45.8.
The speed of the downturn was not as steep as suggested by the early responses to the survey in November, Tim Moore, economics director at IHS Markit, said.
Overall service sector output was still severely impacted by widespread business closures among consumer-facing service providers, but other types of firms often commented on successfully adapting to the new lockdown restrictions and seeing a reduced impact on client spending than initially expected, Moore added.
New business volumes decreased for the second straight month primarily due to temporary closures among hospitality, travel and leisure businesses. There was a steep downturn in new orders from abroad.
Employment decreased sharply since October amid shrinking customer demand, pressure to cut costs and concerns about the speed of recovery.
Input prices continued to rise in November. Rising input costs contributed to a squeeze on margins, as service providers signaled another round of price discounting.
The degree of confidence towards the year ahead outlook was the highest since February.
The overall private sector output shrank in November for the first time in five months with the weakness across the service economy more than offsetting robust manufacturing growth.
The composite output index came in at 49.0 in November versus 52.1 in October. The flash score was 47.4.