UK Private Sector Growth At 6-Month Low
The UK private sector growth eased sharply in August largely due to staff shortages and supply chain issues, flash survey results from IHS Markit and the Chartered Institute of Procurement & Supply showed on Monday.
The flash composite output index decreased to a six-month low of 55.3 in August from 59.2 in July. The score was forecast to drop to 58.4.
Weaker recoveries were seen in both the manufacturing and service sectors. The services Purchasing Managers’ Index fell to 55.5 from 59.6 in July. The expected level was 59.0.
The manufacturing PMI came in at a five-month low of 60.1 versus 60.4 in the previous month. The reading was forecast to drop to 59.5.
New order growth eased only slightly in August, the survey showed. Efforts to rebuild capacity and strong optimism towards the business outlook contributed to the fastest rise in employment numbers since the index began in January 1998.
Nonetheless, backlogs of work increased for the sixth month in a row as businesses struggled to keep up with customer demand.
Inflationary pressures showed signs of easing in August, with input prices rising at the weakest pace for three months.
Duncan Brock, group director at CIPS, said “An abnormally large slowdown in overall activity in August offers a stark warning to the UK economy that the accelerated levels of growth we’ve seen earlier this summer are not sustainable.”
“The large fall in the composite PMI suggests that the economic recovery might be slowing a bit faster than we had thought,” Kieran Tompkins, an economist at Capital Economics, said. “That poses a downside risk to our forecast for the economy to return to its pre-pandemic level by October, the economist added.”
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