UK services sector output plummeted at the fastest pace on record in March amid the Covid-19 coronavirus pandemic, and much more sharply than at the height of the global financial crisis, a survey has confirmed.

The survey, published yesterday by the Chartered Institute of Procurement & Supply and IHS Markit, showed the already-steep decline in services output accelerated in late March. The coronavirus lockdown in the UK was announced on March 23.

CIPS’s services activity index tumbled from 53.2 in February to 34.5 last month on a seasonally adjusted basis. This was even worse than a previous “flash” reading of 35.7, covering the period from March 12 to 20, and was well adrift of the previous record low of 40.1 recorded in November 2008 at the height of the global financial crisis.

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The latest reading covers the period to March 27. It is the lowest since the survey began in July 1996 and is way adrift of the level of 50 deemed to separate expansion from contraction.

New work for services companies also tumbled at a record pace last month.

And services employment fell for the first time in five months in March, and at the fastest pace since June 2009.

CIPS said: “Service providers commented on a mixture of hiring freezes and forced redundancies amid the slump in business activity seen during March. That said, a number of companies reported placing staff on furlough, which appears to have softened the overall scale of job cuts recorded in the latest survey period.”

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It added: “The slump in activity was almost exclusively linked by survey respondents to business shutdowns and cancelled orders in response to the Covid-19 pandemic.”

Combined UK services and manufacturing activity also tumbled in March at the fastest pace since comparable records began more than two decades ago, with CIPS’s composite output index covering these sectors dropping from 53 to 36.


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