Ryan FowlerThe S&P Global UK Services PMI was revised slightly down to 51.1 in December 2024 from a preliminary of 51.4, showing a modest improvement from 50.8 in November. This marks the 14th consecutive month of expansion in the service sector, though growth remained tepid and among the weakest recorded in 2024.
Despite the slight expansion, the sector faces notable challenges, particularly in the job market. Employment fell for the third consecutive month, with the decline accelerating to the fastest rate since January 2021. The decrease in staffing levels reflects ongoing concerns about weak demand following the Autumn Budget, as businesses brace for higher National Insurance costs.
New orders grew marginally, reaching their lowest level since October 2023, as domestic demand remained weak. Export sales also took a hit, contracting for the first time since September 2023. The drop was largely driven by reduced orders from EU clients, although stronger demand from US markets provided some relief.
Meanwhile, input price inflation surged to an eight-month high, driven by rising wage pressures and increased costs of raw materials. Consequently, output price inflation reached a six-month high in December, remaining well above pre-pandemic levels. These inflationary pressures continue to weigh on business confidence, with firms expressing caution over future growth prospects.
The ongoing decline in employment within the service sector highlights the need for strategic workforce management as businesses navigate economic uncertainties. HR leaders and business owners must balance cost pressures with maintaining adequate staffing levels to support long-term growth. The data underscores the importance of proactive measures in workforce planning, particularly in a challenging environment where cost inflation and weak demand are eroding profitability.
