UK businesses stuck in reverse in October, PMIs show
2023.10.24 05:12
© Reuters. FILE PHOTO: People wait to be served at an outdoor table at a restaurant in Manchester, Britain, December 18 , 2021. REUTERS/Phil Noble/File photo
LONDON (Reuters) – Britain’s businesses reported another decline in activity this month and cost pressures have cooled further, a survey showed on Tuesday, underlining the risk of recession ahead of the Bank of England’s interest rate decision next week.
The “flash” preliminary reading of the S&P Global UK Purchasing Managers’ Index (PMI) for the services sector fell in October to 49.2 from 49.3 in September, the lowest reading since January and below the 50 no-change mark for a third month.
A Reuters poll of economists had pointed to an unchanged reading.
The survey’s gauge of new business fell to its lowest level since November last year, although the recent deterioration in employment eased a little.
Services companies reported the smallest increase in input costs since February 2021, although selling prices rose at a slightly faster rate.
Overall the PMI pointed to a flatlining economy, with optimism in boardrooms reaching its lowest point so far this year.
The readings are likely to reinforce expectations that the Bank of England will keep interest rates on hold for a second meeting running on Nov. 2, after Governor Andrew Bailey said recent data had turned out broadly as the BoE expected.
“The overall pace of decline remains only modest, signalling a mere 0.1% quarterly rate of GDP decline, but gloom about the outlook has intensified in the uncertain economic climate, boding ill for output in the coming months,” said Chris Williamson, chief business economist at S&P Global.
“A recession, albeit only mild at present, cannot be ruled out.”
A little over a third of the economists polled by Reuters over the last week said they expected a recession.
The PMI for the manufacturing sector rose to 45.2 from September’s 44.3, a three-month high but still signalling a rapid contraction in output.
Manufacturers’ selling prices contracted at the fastest rate since February 2016.
The composite PMI, which combines services activity and manufacturing output, inched up to 48.6 from 48.5.
