'Lacklustre' business activity weighs on UK service sector - PMI

(Sharecast News) - Business activity across the UK's dominant service sector ticked only modestly higher in December, a closely-watched survey showed on Tuesday, missing expectations. The S&P Global UK services PMI business activity index came in at 51.4 last month, up only fractionally on November's 51.3. It was also lower than S&P Global's earlier flash estimate and consensus, both for 52.1.

Respondents pointed to "challenging" business conditions, including constrained client spending and the subdued economic prospects for the UK. As a result, the PMI composite output index nudged up just 0.2 points to 51.4, also below consensus for 52.1.

The composite index is a weighted average of the manufacturing output and services indices.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Lacklustre business activity growth continued across the UK service sector at the end of 2025.

"The most positive development was a renewed upturn in new business intakes, following a slight decline during November. Order books were also supported by a marginal rebound in export sales.

"However, survey respondents still noted sales headwinds linked to weak UK economic prospects alongside challenging operation conditions.

"Meanwhile, inflationary pressures across the service economy strengthened at the end of the year; input prices rose to the greatest extent for seven months."

Matt Swannell, chief economic advisor to the EY Item Club, said: "With the tax rises announced at Budget towards the bottom end of expectations, some businesses' pre-Budget worries have eased. But concerns over political stability remain.

"While little signal can be taken from the month-to-month moves in the PMI, it will likely be difficult for the UK economy to gain momentum over the course of this year.

"With the Bank of England having indicated that it will be cautious around further cuts, a backdrop of weak growth and some stickiness in inflation will do little to move the dial for a divided Monetary Policy Committee."

Data for the UK services PMI were collected between 4 and 19 December. Surveys were sent to a panel of around 650 service sector companies, ranging from consumer (excluding retail) to transport and finance.