5th Mar 2025 09:55
(Alliance News) - The UK service sector recorded only marginal growth in February, as rising output masked the steepest decline in new work since November 2022 and the fastest pace of job shedding in over four years, survey results from S&P Global showed on Wednesday.
The S&P Global UK services business activity index rose slightly to 51.0 points in February from 50.8 in January, extending its run above the 50.0 neutral mark for a sixteenth consecutive month. However, the latest reading remained well below the long-run series average of 54.3, and pointed to "only a marginal expansion in service sector output".
The reading came just below the flash estimate of 51.1 points.
Tim Moore, economics director at S&P Global Market Intelligence, said: "Demand conditions softened in both domestic and export markets, with total new work falling to the greatest extent for just under two-and-a-half years.
"Business services were hit by cutbacks to investment spending among clients and delayed decision-making due to broader geopolitical headwinds. Consumer service providers meanwhile noted constrained discretionary spending and pressure on household budgets from rising living costs."
S&P Global added: "Export sales decreased again in February. The latest survey
indicated a solid fall in new work from abroad that was the steepest since December 2021."
Job cuts accelerated, with employment in the services sector falling at the sharpest pace since November 2020. Around 24% of firms reported a reduction in staffing, compared to only 13% that signalled an increase.
Cost pressures remained elevated, driven primarily by higher wages. Around one-third of survey respondents reported an increase in input costs, while just 2% signalled a reduction.
Tim Moore added: "UK service providers achieved another modest increase in overall business activity during February, thereby extending a run of expansion that stretches back to November 2023.
"However, there has been a clear loss of growth momentum since last autumn and the survey's forward-looking indicators continue to suggest an elevated risk of stagflation on the horizon."
The S&P Global UK composite PMI, which tracks activity across both manufacturing and services, registered 50.5 points in February, down slightly from 50.6 in January.
On Monday, S&P Global said that for the UK's manufacturing sector, the S&P Global PMI fell to 46.9 points in February from 48.3 in January.
The survey features a panel of 650 service sector companies in the UK, with responses collected in the second half of the month.
By Eva Castanedo, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights reserved.