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British consumers are tightening their belts as business activity fell for a fifth consecutive month, according to new data that suggests the economy has entered a prolonged recession.
Retail sales in Great Britain fell by 0.4 percent between October and November, according to figures published by the Office for National Statistics on Friday. Economists polled by Reuters had expected a rise of 0.3 percent.
Meanwhile, S&P Global’s flash UK composite purchasing managers’ index, or PMI, a monitor that closely monitors the health of the private sector, rose to 49 in December from 48.2 in November.
Despite the increase, the reading was below 50 for the fifth consecutive month, indicating that most businesses reported contraction.
The data fuels worries that the economy has already entered a prolonged recession. Gross domestic product fell in the third quarter with further declines expected in the fourth quarter.
Chris Williamson, chief business economist at S&P Global Market Intelligence, which compiles the PMI, said the December data “raises the likelihood that the UK is in recession,” with the PMI pointing to a 0.3 percent GDP contraction in the final three. months of the year.
Thomas Pugh, economist at consulting company RSM UK, said: “The big picture is that the UK is almost certainly in a recession which we expect to last until the third quarter of 2023 and result in a fall in GDP of around 2 per cent. “
Separate data from research company GfK showed that UK consumer confidence remained below minus 40 for the eighth consecutive month in December, marking the longest period of pessimism in almost half a century.
Online shopping recorded a 2.8 percent decline in retail sales volume. Darren Morgan, ONS director of economic statistics, said Black Friday shopping holiday offers had failed to “provide their usual lift to the sector”.
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Purchases of non-food items and fuel also declined, with only food sales showing an increase from October to November. Morgan said customers were “stocking up early to try to spread the cost of the Christmas festivities”.
Accenture UK retail lead Lynda Petherick said the data “will come as a big disappointment to retailers” after the World Cup and Black Friday failed to boost sales significantly.
Consumer inflation eased slightly to 10.7 percent last month from a 41-year high of 11.1 percent in October.
The PMI also showed the first decline in the number of workers since February 2021. External demand also remained subdued in December, with overall new export orders running for a sixth straight month, according to the survey.
The slowdown in exports was driven by the manufacturing sector, with the relative index falling nearly two points to 44.7, the lowest level since May 2020.
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