- Prior 52.6
- Manufacturing PMI 46.0 vs 51.1 expected
- Prior 52.1
- Composite PMI 50.9 vs 51.1 expected
- Prior 52.1
The services reading may have beat on estimates but there was a sharp drop in manufacturing activity on the month, with both the sector print and output index falling to 27-month lows. According to panel members, reduced customer demand, delay in delivery of inputs and labour shortages all weighed on performance. Meanwhile, new business growth was seen at the slowest in 18 months - with growth still largely driven by the services sector. S&P Global notes that:
“The UK private sector moved closer to stagnation in August, as mild growth of activity across the service sector only just offset a deepening downturn at manufacturers. Waning customer demand amid the weaker economic outlook, and shortages of both staff and inputs, were reported to have hit goods producers hard, with firms registering the quickest drops in output and new work since May 2020. Excluding the initial phase of the pandemic in early-2020, the reduction in manufacturing output was the quickest seen since the start of 2009. Meanwhile, the service sector registered the weakest increase in activity since the recovery began in early 2021.
“More encouragingly, the latest survey also pointed to a further easing of inflationary pressure, with average input costs rising at the softest rate for nearly a year. Though still well above the historical average, the moderation in cost pressures will provide some relief to Bank of England policymakers who are keen to tame inflation , which is currently at a four-decade high.
“However, the tightening of financial conditions via interest rate hikes, the cost of living crisis, labour shortages and strained supply chains are all likely to dampen economic performance further and keep costs elevated in the months ahead.”