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(Alliance News) – The UK private sector continued to contract in November, according to preliminary estimates on Wednesday, adding to the signs of an impending recession.
The S&P Global/CIPS flash composite purchasing managers’ index edged up to 48.3 points in November from 48.2 in October. Staying below the 50.0-point no-change mark, it shows the UK’s private sector remains in contraction.
However, the reading was better than expected, with FXStreet-cited consensus anticipating a deterioration to 47.5 points.
“A further steep fall in business activity in November adds to growing signs that the UK is in recession, with GDP likely to fall for a second consecutive quarter in the closing months of 2022. If pandemic lockdown months are excluded, the PMI for the fourth quarter so far is signalling the steepest economic contraction since the height of the global financial crisis in the first quarter of 2009, consistent with the economy contracting at a quarterly rate of 0.4%,” commented Chris Williamson, chief business economist at S&P Global Market Intelligence.
Forward-looking indicators, such as a sharp decline in demand for goods and services, suggest the UK downturn is likely to deepen into the new year, Williamson noted.
On a more positive note, business activity expectations increased slightly during November. This was as worries about political uncertainty eased, as the fallout settled from September’s disastrous mini-budget from the UK government.
Concerns over a recession and worsening economic conditions continued to weigh on sentiment, however.
“Price pressures meanwhile remain elevated but show further signs of cooling, often linked to weakened demand, which – combined with the growing recession signals – suggest that the Bank of England may start to make less aggressive interest rate hikes in the coming months,” Williamson added.
The composite data encompasses the whole of the UK private sector. It is calculated using a weighted average of the services and manufacturing readings.
The composite data encompasses the whole of the private sector. It is calculated using the services PMI and the manufacturing output index.
The flash services PMI remained unchanged in November from October’s reading of 48.8 points. This was higher than the consensus expectations of 48.0.
The manufacturing output index reached a four-month high of 45.4 in November, rising from 45.0 in October. The flash manufacturing PMI matched last month’s reading of 46.2, beating the consensus estimate of 45.8.
The PMIs are compiled from responses to surveys sent to around 650 UK manufacturers and 650 UK service firms, with data collected between November 11 and 21.
By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
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