UK December flash services PMI 52.1 vs 51.6 expected

• Prior 51.3
• Manufacturing PMI 51.2 vs 50.4 expected
• Prior 50.2
• Composite PMI 52.1 vs 51.6 expected
• Prior 51.2

These are nice beats, but the commentary isn’t as good. The agency cites lacklustre growth, worryingly widespread job losses and renewed upturn in selling price inflation across both goods and services.

It keeps the BoE on track to cut rates on Thursday, but the central bank will likely sound more cautious on the next moves, remaining highly data-dependent.

Key Findings:

• Output growth accelerates in December, led by
  sharpest rise in new business for 14 months

Comment:

Chris Williamson, Chief Business Economist at S&P
Global Market Intelligence:

“December’s flash PMI surveys brought welcome news on
faster economic growth at the end of the year, with businesses
buoyed in part by the post-Budget lifting of uncertainty. The
PMI is consistent with GDP growth accelerating to 0.2% in
December, albeit with a more modest 0.1% gain signalled for
the fourth quarter as a whole.

“It’s a big relief that business confidence has not slumped in a
repeat of last year’s post-Budget gloom. Instead, companies
have ended the year on a slightly more optimistic note amid
signs of improving demand now that some of the uncertainty
created by the Budget has cleared. New orders are in fact
growing at the fastest rate for over a year.

“However, the overall pace of output and demand growth
remains lacklustre, and the expansion is still very dependent
on technology and financial services activity, with many other
parts of the economy struggling to grow or in decline.

“Job losses are also again worryingly widespread, and it
remains to be seen whether the uptick in orders during
December will persuade more companies to start hiring again,
especially as rising staff costs continue to be reported as one
of the key concerns of businesses. These higher cost pressures
were in turn cited as the key cause of a renewed upturn in
selling price inflation across both goods and services.

“The sluggish growth and worrying jobs data from the flash
PMI data therefore suggest that the odds remain in favour of
a further cut to interest rates at the December MPC meeting,
but that the path to further rate cuts in 2026 remains very data
dependent, as policymakers await confirmation that price
pressures are going to soften materially as the year proceeds.”

This article was written by Giuseppe Dellamotta at investinglive.com.