FEARS that the UK economy may have failed to grow in the fourth quarter of 2019 were reinforced yesterday by a survey revealing the key services sector stagnated in December.

The Chartered Institute of Procurement & Supply’s business activity index for services rose from 49.3 in November to 50 in December on a seasonally adjusted basis, to signal stagnation rather than contraction.

However, while the final reading of 50 was not as bad as a “flash” estimate of 49 published in mid-December, the services sector remains in its longest growthless run since 2009.

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And CIPS’s composite output index for the UK manufacturing and services sectors remained stuck at 49.3 in December, unchanged from November and well below the 50 no-change mark, thus signalling continued contraction of the private-sector economy.

Official fourth-quarter UK gross domestic product figures are due to be published next month.

Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said: “Even allowing for the fact that the purchasing managers’ surveys can tend to present an overly gloomy picture at times of heightened uncertainties, the December surveys fuel suspicion that the UK economy likely stagnated in the fourth quarter.”

He added: “A concern for the economy is that still-significant Brexit concerns along with a challenging global environment may well limit the upside for investment in 2020 while consumers may well face less-favourable fundamentals due to a softer labour market and reduced earnings growth.”

CIPS’s survey showed a rise in services companies’ confidence about the prospects for increased activity on a 12-month horizon, to the highest level since September 2018.

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And the survey pointed to a modest overall rise in new orders for services companies, after a three-month period of decline. Domestic political uncertainty ahead of the December 12 General Election has been cited by CIPS as a factor weighing on orders.

However, the survey shows new export business fell for a fourth straight month in December, with CIPS noting that such declines were often linked by companies to “the lack of clarity in relation to Brexit”.

CIPS director Duncan Brock said: “A marginally less volatile picture emerged in December as the sector was rescued by a small uplift in new orders for the first time since August, elevating it out of its doldrums, but only just.

“European customers were less convinced, experiencing ongoing Brexit nerves, and were unwilling to take out their wallets.