Financial News: UK Private Sector Contracts Modestly In November

UK Private Sector Contracts Modestly In November

11/22/2024 - 05:53:00 (RTTNews)

(RTTNews) - The UK private sector activity deteriorated for the first time in just over a year in November as growth in new business eased amid weak business confidence, flash survey results published by S&P Global revealed on Friday.

The flash composite output index dropped to 49.9 in November from 51.8 in October.

Any reading below 50.0 suggests contraction, while a score above 50 indicates expansion in the sector.

Service providers indicated stagnant levels of business activity, while the manufacturing sector contracted at the steepest pace in nine months, the survey said.

The services business activity index dropped to a 13-month low of 50.0 in November from 52.0 in October. The expected score was 52.3.

The manufacturing purchasing managers' index declined to 48.6 from 49.9 in October. Economists expected a reading of 50.1.

Total new order growth in the British private sector was the weakest since the current sequence of growth began in December 2023. This was mainly linked to headwinds from subdued business confidence and caution among clients in the wake of the Autumn Budget.

The survey revealed that weak demand and growing payroll expenses combined to cause yet another little drop in employment in the private sector. Reduced workforce numbers were recorded in both the manufacturing and service sectors.

On the price front, input costs grew at an accelerated pace due to strong salary pressures, alongside rising technology costs, food prices, and energy bills. Nevertheless, the selling prices rose at the slowest pace since February 2021.

Looking ahead, business activity expectations for the year ahead were the least upbeat since December 2022, largely due to a considerable slide in service sector confidence. The growth expectations at the manufacturing side were hindered by domestic economic concerns.

"The November PMI is indicative of the economy slipping into a modest decline, with GDP dropping at a 0.1 percent quarterly rate, but the loss of confidence hints at worse to come-including further job losses -unless sentiment revives," Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said.

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