New business and employment activity all contracted at record rates as business expectations turned negative in the UK services industry, according to new research.

The Chartered Insitute of Purchasing and Supply (CIPS)/Markit survey shows that activity fell to a new survey low of 40.1, the seventh successive month in which it has fallen, with nearly 38% of companies registering a decline in November.

The Outstanding Business Index contracted at a record rate, with a reading of 37.9.

The seasonally adjusted Service Sector Business Expectations Index recorded a reading of 49.5 as almost a third of the survey panel predict that activity will be lower than present levels in a year’s time.

Roy Ayliffe, director of professional practice at the CIPS, said: “Purchasing managers in the UK services sector reported record falls across activity, new business and employment as the economic climate continued to worsen. As clients put decisions on hold in the hope of an improvement in future conditions, there was further spare capacity which enabled firms to clear existing contracts at a survey record rate. Falling levels of outstanding work were hardest felt in the financial services sector as the credit squeeze showed no signs of abating.”