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- Composite PMI 49.6 vs 50.9 prelim
The revisions see the PMI data suggests that the UK economy has slipped into contraction in August with services activity crawling towards a stagnation. This is the weakest run of activity in 18 months as cost pressures remain elevated as businesses remain extremely downbeat about the outlook over the next year. S&P Global notes that:
“UK private sector business activity fell for the first time in a year-and-a-half in August as an increasingly severe downturn in manufacturing was accompanied by a nearstalling of the vast services sector. Demand for consumerfacing services such as restaurants, hotels, travel and other recreational activities is collapsing under the weight of the cost-of-living crisis, with demand for business services also coming under pressure amid concerns over rising costs and the darkening economic outlook. Financial services firms are meanwhile reporting subdued trading amid the recent hikes in interest rates, adding to an increasingly broadbased malaise across the economy.
“Jobs growth is already starting to weaken and, with hiring tending to lag changes in order books, the recent slump in demand alongside surging energy prices points to a growing reticence to employ staff in coming months.
“Although the survey data are currently consistent with the economy contracting at a modest quarterly rate of 0.1%, deteriorating trends in order books suggest the incoming prime minister will be dealing with an economy that is facing a heightened risk of recession, a deteriorating labour market and persistent elevated price pressures linked to the soaring cost of energy.”
/GBP