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(Alliance News) – A continuing decline in the UK services sector points to the increasing likelihood of a recession, according survey results released on Monday.
The latest S&P Global/CIPS UK services purchasing managers’ index was unchanged from October at 48.8 in November. The final reading was in line with the flash estimate.
At below the 50.0 no-change mark, the score shows the UK’s key economic sector remains in contraction.
The services PMI remained at its lowest level since January 2021, and November was the second consecutive month of decline.
Inflows of new work fell more sharply during November, as demand for goods and services slumped. This caused companies to scale back their hiring, with only very slight growth in employment.
The reading hints at the growing risk of a recession, according to Chris Williamson, S&P Global’s chief business economist.
“A change of government and its new economic policies may have helped arrested some of the financial market volatility after September’s ‘mini-budget’ but the economic picture remains stubbornly unchanged. The overall rate of economic contraction has held steady compared to October, indicative of [gross domestic product] falling at a quarterly rate of 0.4%. As such, this is the toughest spell the UK economy has faced since the global financial crisis excluding only the height of the pandemic,” he explained.
Business confidence rose off the recent low seen in October, but business optimism remained at one of the lowest levels seen in the past decade.
The composite PMI – a weighted average of comparable services and manufacturing PMI indices – also was unchanged, at 48.2 points, in November, signalling the fourth successive month of private sector contraction. It was slightly lower than a previous flash estimate of 48.3.
Released last Thursday, the manufacturing PMI edged up to 46.5 points in November from 46.2 points in October.
The UK services PMI is compiled by S&P Global from responses to surveys sent to purchasing managers at around 650 UK service sector companies, with data collected between November 11 and 28.
By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
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