UK Private Sector Economy Expands Modestly In November
The UK private sector activity almost stabilised in November after contracting in the previous three months, the purchasing managers’ survey results from S&P Global and the Chartered Institute of Procurement & Supply showed on Thursday.
The flash composite output index rose to a four-month high of 50.1 in November from 48.7 in the previous month. Any score above 50 indicates expansion in the sector. The expected score was 48.7.
This slight expansion came for the first time since July.
Manufacturing output marked a further reduction in November, while service providers experienced marginal business activity growth.
The manufacturing purchasing managers’ index, or PMI, rose to a six-month high of 46.7 in November from 44.8 in the previous month. The reading was forecast to climb to 45.0.
The services business activity index also advanced to a 4-month high of 50.5 in November from 49.5 in September.
As a result of the subdued underlying demand conditions, total new orders received by the private sector declined for the fifth consecutive month.
According to survey respondents, elevated borrowing costs had also impacted demand, especially among construction clients.
Overseas demand was also not favorable in November, with overall export sales decreasing in both the manufacturing and service sectors.
Overall employment numbers in the UK private sector economy remained relatively unchanged due to a lack of stress on operating capacity.
On the price front, the rate of input price inflation accelerated slightly from October’s 33-month low, led by higher fuel costs and strong wage inflation.
Output charge inflation reached its highest level in four months due to accelerated growth in the service sector.
Looking ahead, the PMI survey reported resilient business activity expectations for the year ahead, with the degree of optimism picking up from October’s ten-month low, driven by rising confidence in the service sector.
“The overall uptick in activity was driven by the services sector, which benefited from the pause in the hiking of interest rates and improving business conditions,” CIPS Chief Economist John Glen said.
“Manufacturers will be hoping the permanent extension of the full expensing tax break and the further investment into strategic manufacturing announced in yesterday’s Autumn Statement will give the sector the timely boost it needs,” the economist added.
The sticky nature of inflation remains a cause for concern for businesses, Glen said.
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