S&P Global UK Services PMI data signalled a sustained expansion of business activity. However, incoming new work declined in January and the pace of job shedding accelerated to its sharpest for four years.
At the same time, greater payroll costs meant that input price pressures continued to intensify at the start of 2025. The overall rate of cost inflation was the highest for nine months, which resulted in a robust and accelerated rise in average prices charged by service sector firms.
Adjusted for seasonal influences, the headline S&P Global UK Services PMI Business Activity Index registered 50.8 in January, down fractionally from 51.1 in December and the joint-lowest for 15 months (equaling that seen in November 2024). The latest reading was also well below the pre-pandemic average and signalled only a marginal increase in service sector output.
January data pointed to a reduction in private sector staffing levels for the fourth month running. Aside from the pandemic, the pace of job shedding was the steepest since the global financial crisis more than 15 years ago.
Lower workforce numbers reflected subdued demand conditions and ongoing efforts to mitigate higher payroll costs. Overall input price inflation hit an 18-month high in January.
Meanwhile, the seasonally adjusted S&P Global UK PMI Composite Output Index registered 50.6 in January. This was up fractionally from 50.4 in December, but still indicative of only a marginal rise in private sector output.