- Prior 50.0
- Manufacturing PMI 45.8 vs 48.0 expected
- Prior 48.4
- Composite PMI 47.2 vs 48.1 expected
- Prior 49.1
The economic downturn in the UK continues to intensify with the services sector recording its sharpest decline in activity since January last year. To put things into perspective, the headline reading is a 21-month low, similar to the composite reading while the manufacturing print is a 29-month low. Weaker demand conditions are noted once again with high inflation, increasing political uncertainty and rising interest rates cited as reasons for the downbeat sentiment. S&P Global notes that:
“October's flash PMI data showed the pace of economic decline gathering momentum after the recent political and financial market upheavals. The heightened political and economic uncertainty has caused business activity to fall at a rate not seen since the global financial crisis in 2009 if pandemic lockdown months are excluded. GDP therefore looks certain to fall in the fourth quarter after a likely third quarter contraction, meaning the UK is in recession.
“Business confidence has meanwhile collapsed, sliding to a level rarely seen before in 25 years of survey history, meaning companies are becoming increasingly nervous about the outlook. As night follows day, investment and employment will suffer in the months ahead as companies adjust to the increasingly challenging environment. Hiring is already slowing sharply, with manufacturing now even shedding workers.
“While the economic downturn has led to reduced upward pressure on prices, the weak pound and high energy costs meant that input cost inflation remains higher than at any time in the survey’s history prior to the pandemic.
“The resulting elevated, albeit easing, price pressures look set to drive the Bank of England into further aggressive interest rate hikes. On top of the collapse in political stability, financial market stress and slump in confidence, these higher borrowing costs will add to speculation of a worryingly deep UK recession."