UK service sector activity has contracted for the third consecutive month

Service sector activity in the UK has contracted for three consecutive months, with a decline in October.

According to the S&P Global/CIPS statement, consumer demand in the services sector, which accounts for about 80 percent of the country’s economy, is weakening due to the high cost of living, high interest rates and weak consumer confidence.

The services purchasing managers’ index (PMI) was 49.5 in October. Although this level is slightly above 49.3 in September, services PMI data has remained below the 50 level for the last 3 months.

In PMI data, above 50 indicates growth, while below this level indicates contraction.

The manufacturing and services sector composite PMI reached 48.7 in October. This data showed a limited increase compared to the Composite PMI data of 48.5 in September, which was the lowest in the last 8 months.

‘THE LEVEL OF OPTIMISM IS STILL AT ITS LOWEST LEVEL’

S&P global market research manager Tim Moore, whose assessments were included in the statement, said the decline in service sector activity in the UK was also seen in October and said: “Forward-looking indicators show that service sector activity will continue to teeter on the brink of economic stagnation. “The level of optimism about the sector’s prospects also remained at its lowest level so far this year, this has not changed despite the halt in growth of interest rates.” he said.

Yesterday, the Bank of England (BoE) left the monetary policy rate constant at 5.25 percent, the highest level in the last 15 years. The Bank of England, which has raised interest rates 14 times in a row since December 2021, paused interest rate increases in September and November after aggressive tightening. (AA)