(Alliance News) - The UK's private sector continued to contract in January, but input inflation eased, survey results showed on Friday.
The latest S&P Global/CIPS UK composite purchasing managers' index edged down to 48.7 points in January, down from 49.9 in December. Falling further beneath the 50-point no-change mark, it shows the decline in business activity has worsened.
S&P noted that, although only marginal, the rate of decline for overall business activity was the fastest since January 2021.
"January data pointed to the weakest service sector performance for two years as cutbacks to business and consumer spending resulted in a fourth consecutively monthly reduction in output levels. The latest survey illustrates that the UK economy risks falling into recession as labour shortages, industrial disputes and higher interest rates take their toll on activity," said S&P Economics Director Tim Moore.
"However, the downturn in service sector output remained relatively shallow at the start of 2023. Encouragingly, new order volumes moved closer to stabilisation and export sales picked up in January, which contributed to a marginal upturn in overall employment numbers."
The S&P Global/CIPS UK services PMI fell to 48.5 points in January, down from 49.0 in December. This is the sixth month that this figure has been the crucial 50.0 no-change mark.
This also represents the longest period of continuous decline in the private sector since the global financial crisis in 2008/2009. However, the rate of contract was only modest.
S&P noted that input cost inflation moderated to its lowest since May 2021, adding some optimism to Friday's figures.
According to results on Wednesday, the seasonally adjusted S&P Global-CIPS UK manufacturing PMI edged up to 47.0 points in January from December's 31-month low of 45.3 and above the flash estimate of 46.7.
This marked the sixth consecutive month of contraction in UK manufacturing.
The composite PMI is a weighted average of the UK's manufacturing and services PMIs, compiled from responses to surveys sent to 650 services companies and 650 manufacturers, with data collected between October 12 and 27.
By Sophie Rose, Alliance News reporter
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