UK services activity fell to its lowest levels since last May as stricter coronavirus lockdowns battered the country’s businesses.
The IHS Markit/Cips purchasing managers (PMI) index for services registered 39.4 in January, with any score below the 50 mark indicating contraction.
That’s more than a 10 point drop from last month’s reading, one of the biggest falls on record.
It’s also markedly worse than the average performance across the Eurozone, which reported a reading of 45.4.
Today’s figures confirm flash estimates of a 38.8 reading recorded a couple of weeks ago.
Economists had expected a slowdown, with the predicted overall PMI figure hovering around 45, but this more aggressive slowdown is sure to spook markets.
The UK economy is highly reliant on the services industry, which makes up around 70 per cent of GDP.
Tim Moore, economics director at IHS Markit, said: “Service providers experienced a steep downturn in business activity due to the third national lockdown in January, although the speed of decline remains much slower than last spring.
“Tight restrictions on travel, leisure and hospitality resulted in severely reduced trading among customer-facing businesses.
“Temporary closures led to shrinking demand for business services and a ripple effect of corporate spending cutbacks. As a result, total new work fell at the fastest pace since May 2020 and this setback contributed
to a steeper rate of job shedding at the start of the year.”