A new flash composite PMI for November shows the “sharpest drop in UK private sector output since July 2016”.
The IHS Markit/CIPS Flash UK Composite PMI, released for the first time for November, gives a reading of 48.5 across services and manufacturing in the UK, against the no-change reading of 50. The flash PMI is based on around 85% of the usual monthly responses from firms.
Survey respondents reported weaker economic conditions connected to Brexit alongside a fresh injection of uncertainty from the upcoming General Election.
Manufacturers reported customer overstocking ahead of the 31 October Brexit deadline had acted as a headwind to production volumes in November.
New work dropped for the fourth month running with softer demand contributing to the largest reduction in backlogs of work for more than seven years.
Duncan Brock, group director at CIPS, said: “With the longest stretch of weak numbers for a decade, the headline figure is a sad sight to behold. New orders fell at the fastest pace since July 2016, as domestic and overseas clients, worn out by continuing political indecision withdrew from the marketplace, reducing overall activity in the manufacturing and services sectors.
“There was some light relief from softer inflationary pressure. The weak pound has gathered a modicum of strength making raw materials a little more affordable, but there was no such respite for consumers.
“In the services sector, businesses assaulted by years of rising prices held back from passing on the full benefit of lower input cost inflation and held on to their margins, which did nothing to persuade already reluctant customers to spend.”
Chris Williamson, chief business economist at IHS Markit, said: “The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, and also pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy.”
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