Latest data released by Markit/CIPS - 23 November 2020
- Prior 51.4
- Manufacturing PMI 55.2 vs 50.5 expected
- Prior 53.7
- Composite PMI 47.4 vs 42.5 expected
- Prior 52.1
The UK economy falls back into contraction territory amid a renewed lockdown, but the decline in business activity is less than anticipated with the rise in manufacturing helping to slightly offset the drop in services. However, the devil is in the details.
The jump in the manufacturing reading owes much to an increase in supplier delivery times amid severe delays at UK ports, as well as robust levels of stock building ahead of the end of the Brexit transition period on 31 December.
Still, the drop in services activity is more damaging to the UK economy and that reaffirms some of the concerns ahead of the year-end. Markit notes that:
"A double-dip is indicated by the November survey data, with lockdown measures once again causing business activity to collapse across large swathes of the economy. As expected, hospitality businesses have been the hardest hit, with hotels, bars, restaurants and other consumer facing service providers reporting the steepest downturns.
"Some comfort comes from the data suggesting that the impact of the lockdown has not been as severe as in the spring, and manufacturing has also received a significant boost from inventory building and a surge in exports ahead of the UK's departure from the EU at the end of the year, providing a fillip for many companies. However, while the lockdown will be temporary, so too will this pre-Brexit boost.
"The health of the economy in the new year therefore remains highly uncertain, but it is very encouraging to see the survey's gauge of business optimism surge higher in November. Improved prospects for the year ahead are thanks mainly to the news of successful vaccine trials, which at last provides a light at the end of the tunnel for many businesses."