UK recession moderates in December but factories struggle – PMI | Daily News Byte

UK recession moderates in December but factories struggle – PMI

 | Daily News Byte

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LONDON, Dec 16 (Reuters) – The slowdown eased slightly across British businesses this month, except for manufacturers, and companies reported the weakest cost pressures since mid-2021, a survey showed on Friday.

The UK S&P Global Composite Purchasing Managers’ Index (PMI) rose unexpectedly to 49.0 from 48.2 in November, although it remained below the 50 threshold indicating growth. A Reuters poll of economists pointed to a reading of 48.0.

All the improvements were led by the dominant services sector, which shed jobs for the first time since October 2020, as the decline in British manufacturers deepened.

The overall survey fits with other signs that the economy is contracting at a slower pace than worsening, with price pressures easing from historically high levels.

The survey came a day after Bank of England officials raised interest rates and signaled that more hikes were likely despite the slowdown as the central bank tries to bring down inflation that hit a 41-year high in October.

“December data raises the possibility that the UK is in recession, with the PMI suggesting a 0.3% GDP contraction in the fourth quarter after a 0.2% contraction in the three months to September,” said Chris Williamson, chief business economist at S&P Global. .

The composite PMI’s inflation gauges for both businesses’ input costs and their sales prices fell to their lowest levels since mid-2021.

The PMI for the services sector rose to 50.0, indicating stability, from 48.8 in November.

Factories, which account for less than 10% of economic output, fared worse. The manufacturing PMI fell to 44.7 from 46.5, marking its lowest level since May 2020 – the first during the depth of the COVID-19 lockdown.

Williamson said, “It’s no surprise to see that businesses are batting down the hatches, particularly by reducing headcounts, in a sign that the recession is not just about to go away but could yet accelerate again, especially with further interest rate hikes in December.” With that in mind,” Williamson said. .

Reported by Andy Bruce; Editing by Hugh Lawson

Our Standards: The Thomson Reuters Trust Principles.

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