UK service providers signalled a reduction in business activity during November - IHS Markit/CIPS

According to the report from IHS Markit/CIPS, UK service providers signalled a reduction in business activity during November, which ended a four-month period of sustained recovery. Survey respondents almost exclusively linked lower activity to tighter restrictions on trade and temporary business closures due to the coronavirus 2019 (COVID-19) pandemic. Despite a second national lockdown in England and ongoing curbs on customer-facing enterprises elsewhere across the UK, the speed of the downturn was much softer than the slump recorded during the second quarter of 2020. Service providers often cited resilient spending among businesses in sectors that had remained open in November.

The seasonally adjusted UK Services PMI Business Activity Index dropped to 47.6 in November, from 51.4 in October. As a result, the index was below the crucial 50.0 no-change mark for the first time in five months. The latest reading was higher than the earlier 'flash' estimate in November (45.8) and signalled a much slower downturn in business activity than the survey-record low seen in April (13.4).

Meanwhile, positive news in relation to vaccines and hopes of a better stage ahead in the pandemic situation led to much greater levels of business optimism in November. The degree of confidence towards the year ahead outlook was the highest since February. Around 60% of the survey panel expect a rise in business activity during the next 12 months, while only 15% forecast a reduction. 

November data indicated a reduction in UK private sector output for the first time in five months, with weakness across the service economy more than offsetting robust manufacturing growth.

The seasonally adjusted UK Composite Output Index registered 49.0 in November, down from 52.1 in October and below the neutral 50.0 threshold for the first time since June.