The third lockdown, which operated in the UK in January to contain COVID-19, accelerated the rate of decline in the service industry to its maximum in 8 months.
The index of business activity in the services sector, calculated by the research company IHS Markit, in the first month of 2021 was 41.2 points, down from the level of 50.4 points in December. Despite the fact that the final reading of the index exceeded its original estimate of 40.6 points, it remained below the neutral mark of 50 points, indicating a decline.
The downturn in the services sector led to the highest decline in the composite production index since May last year. Regardless, service providers are hoping for a recovery in the fourth quarter.
In January, the decline in the volume of foreign orders increased as compared with domestic orders, which led to a sharp decrease in the volume of work in the service sector. Amid rising production costs driven by higher transport costs and higher wages, service providers continued to downsize.