UK service providers indicated that business activity was unchanged in December, following a marginal reduction in the previous month. The stabilisation of service sector output was helped by a return to improving order books, as signalled by the sharpest rise in new work since last July. Job creation also strengthened in the latest survey period, partly driven by a rebound in business optimism to its highest for 15 months.

The seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index registered 50.0 in December, up from 49.3 during November, to signal a stabilisation of overall service sector activity. Economists had expected a decrease to 49.2. Moreover, the latest reading was higher than the earlier 'flash' estimate for December (49.0). Some survey respondents noted a boost to activity from higher underlying customer demand at the end of 2019. Meanwhile, those reporting a drop in output generally cited a headwind from delayed spending decisions ahead of the general election. December data revealed a modest overall expansion of new work received by service sector companies, which ended a three-month period of decline.

The seasonally adjusted IHS Markit/CIPS UK Composite Output Index registered 49.3 in December, unchanged from that seen in November and slightly below the neutral 50.0 threshold. Moreover, the latest reading was the joint-lowest since July 2016. A stabilisation of service sector activity (index at 50.0) was offset by a sharp and accelerated decline in manufacturing output (index at 45.6).