Slump in UK service sector output continues in April - IHS Markit

According to the report from IHS Markit, April data indicated a reduction in UK service sector activity on an unprecedented scale since the start of the survey in July 1996, reflecting emergency public health measures to stem the coronavirus disease 2019 (COVID-19) pandemic.

The headline seasonally adjusted UK Services PMI registered 13.4 in April, down sharply from 34.5 in March, to signal a rapid decline in UK service sector output. The earlier 'flash' reading for April was 12.3. Prior to the last two months, the survey-record low stood at 40.1 in November 2008.

Around 79% of survey respondents reported a drop in business activity during April, which was almost double the survey-record set in March (43%). Reduced volumes of activity in April were of course overwhelmingly attributed to either business closures, shutdowns among clients or shrinking sales due to a slump in non-essential spending. Close to one-in-seven survey respondents (14%) commented on unchanged business activity since March, which was often viewed as a successful outcome after enacting business continuity plans and home working.

Mirroring the trend seen for business activity, latest data signalled survey-record declines in new work, backlogs and employment across the service economy. The small minority of firms reporting growth in new business during April mainly attributed it to online consumer spending, public sector contract awards and demand for services related to remote working. Adding to downward pressure on sales volumes, new business from abroad slumped in April, with transport, tourism and leisure companies often commenting on cancellations of all overseas bookings. Service sector firms also noted that international travel restrictions and business closures led to stoppages on new projects with clients in Europe, the US and Middle East.