UK Services PMI showed a record fall in March - IHS Markit/CIPS

According to the report from IHS Markit/CIPS, March data indicated the steepest downturn across the UK service sector for more than two decades. The slump in activity was almost exclusively linked by survey respondents to business shutdowns and cancelled orders in response to the coronavirus disease 2019 (COVID-19) pandemic.

The headline seasonally adjusted IHS Markit/CIPS Final UK Services PMI Business Activity Index posted 34.5 in March, below the earlier 'flash' reading of 35.7 and down sharply from 53.2 in February. This reading exceeded the previous record low seen at the height of the global financial crisis and signalled by far the fastest downturn in service sector output since the survey began in July 1996. The latest survey data were collected between 12-27 March.

Sharp reductions in activity were broad-based across the sector during March, with only the technology services subcategory recording pockets of continued business expansion. Mirroring the trend for output volumes, latest data indicated a survey-record drop in new work received by service providers. The rate of decline was also much sharper than the previous record seen in November 2008. Survey respondents overwhelmingly attributed lower demand to a slump in business and consumer spending amid emergency public health measures to halt the spread of COVID-19. New business from abroad fell at an even faster pace than that signalled for total orders during March, reflecting international travel restrictions and widespread business closures across Europe.

Employment numbers fell for the first time in five months and at the fastest rate since June 2009. Service providers commented on a mixture of hiring freezes and forced redundancies amid the slump in business activity seen during March.

Meanwhile, business expectations for the next 12 months dropped to the lowest in more than twenty years of data collection. Survey respondents overwhelmingly cited the public health crisis and uncertainty about the likely length of disruption to business operations.