Service firms slash jobs at fastest rate for almost four years amid consumer confidence concerns
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Service sector companies have slashed jobs at the quickest pace in nearly four years, fuelled by worries over lacklustre consumer confidence, despite a modest uptick in activity last month. The closely monitored S&P Global UK services PMI survey registered 51.1 in December, a slight rise from November's 50.8. That figure had marked the lowest point for the index in over a year.
A reading above 50 indicates growth, while below signals contraction. The result was just shy of the 51.4 forecasted by economists. Tim Moore, economics director at S&P Global Market Intelligence, commented: "The service sector ended last year with only a marginal upturn in business activity and a near-stalling of incoming new work.
"Survey respondents suggested that falling business and consumer confidence, largely due to worries about domestic economic prospects in 2025, had led to a considerable loss of growth momentum.". Despite widespread reports of weak demand and reduced client budgets, some areas like technology services continued to experience robust expansion.
Businesses reported subdued sales outlooks, with total new orders barely avoiding a complete standstill during the period. This comes as new export sales saw a downturn for the first time since September 2023, amid cautious sentiment prevailing in global markets.
The influential survey also revealed that weak demand and higher payroll costs have led to the sharpest drop in employment in the sector since January 2021, as companies brace for further labour cost hikes in April. Almost double the number of businesses surveyed (23%) reported a decrease in workforce levels compared to those that indicated an increase (12%).
