The U.K.'s private-sector business activity expanded in December 2020, driven by the manufacturing industry, while the services sector continued to suffer losses amid pandemic restrictions, according to final survey data from IHS Markit and the Chartered Institute of Procurement & Supply, or CIPS.
The Composite Output Index, which takes into account both manufacturing and services sector activity, rose to 50.4 in December from 49.0 in November. The final reading came in below the preliminary estimate of 50.7.
An index reading above 50.0 indicates expansion.
The expansion in the overall private sector largely reflected the manufacturing industry's strong performance which offset a decline in the services sector.
The U.K. Services PMI Business Activity Index increased to 49.4 in December 2020 from 47.6 in November. The latest reading came in below the flash estimate of 49.9.
"December data confirm that the UK service sector has swung back into decline after the partial rebound seen during the third quarter of 2020, largely reflecting tighter restrictions on consumer services amid the worsening trajectory of the pandemic," said Tim Moore, economics director at IHS Markit.
In the services sector, new orders fell for the third straight month, reflecting a slump in client demand amid coronavirus curbs. New business from abroad dropped sharply in the month, driven by travel restrictions and Brexit uncertainty.
Staffing levels slipped for the 10th consecutive month but at the slowest pace since March 2020.
Business optimism in the sector surged to its highest in about six years amid hopes that the pandemic would be contained in the second half of 2021.
"Lessons learned from previous lockdowns gave businesses hope along with a vaccine-fueled confidence to find new and creative ways of operating, using government schemes and maintaining staffing levels as job falls slowed to March 2020 levels," said Duncan Brock, group director at CIPS.
IHS Markit is subject to a merger with S&P Global pending regulatory and other customary approvals.