At 50.4, the final PMI composite index for December was 0.1 points below both the flash estimate and November's final. This signals slower expansion of business activities due to weaker growth in demand. December ends the 12-month period of expansion in new orders. This as well as rising payroll costs added to the sharp decline in employment. Employment fell the sharpest since January 2021.

The service sector index rose to a final 51.1, down 0.3 points versus the flash estimate but up 0.3 points from November's 50.8. Despite this clear expansion of business activity, demand remained close to stagnation with only a fractional increase in total new work. This is possibly due to lowered business confidence among clients after the Autumn Budget as well as the incoming increase in employer's National Insurance contributions.

Staff numbers in the sector fell for the third consecutive month and at the fastest rate since January 2021. Business optimism remained subdued, matching the 2-year low set in November. Input cost accelerated the fastest since April, contributing to a steeper rise in output charges. The overall rate of inflation was the highest in six months.

The UK RPI now stands at minus 26, and RPI-P at minus 31, showing overall economic activity is running behind market expectations.

Forecasters expect no revision in the composite final from the flash at 50.5 and no revision in services at 51.4.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM non-manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.