UK private-sector economic output has tumbled in November at the fastest pace since the month after the June 2016 Leave vote, with Brexit cited by companies as a major factor in the latest drop, a key indicator signals.
The Chartered Institute of Procurement & Supply’s flash UK composite output index for November, compiled by IHS Markit, came in at a 40-month low of 48.5 on a seasonally adjusted basis, well below the level of 50 deemed to separate expansion from contraction. The final reading for October was 50.
And new orders have also fallen this month at the fastest pace since July 2016, CIPS noted.
Chris Williamson, chief business economist at IHS Markit, said: “The decline signalled by the flash PMI (purchasing managers’ index)...adds to what has been the survey’s worst spell since the recession of 2008/09. With an upcoming General Election adding to Brexit-related uncertainty about the outlook, it’s no surprise to see UK businesses reporting falling output and orders.”
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CIPS’s flash UK manufacturing output index for November is 48.3. The final October reading was 49.7. Manufacturing employment has fallen this month at the fastest pace since September 2012, CIPS noted. Some manufacturers reported over-stocking by customers ahead of Prime Minister Boris Johnson’s missed Brexit deadline of October 31 had acted as a headwind to November production volumes.
The flash UK services business activity index for this month, at 48.6, signals the sharpest drop in output in this key sector since July 2016. It is down from a final October reading of 50.
Mr Williamson said: “While Brexit issues such as stockbuilding and car-factory closures have led to volatile GDP (gross domestic product) data so far this year… the PMI surveys are not only warning that the underlying trend in the economy is deteriorating markedly, but also that the labour market is cooling. A worsening jobs market has the potential to feed through to weaker consumer spending and slower wage growth, thereby undermining two of the key supports to the economy in recent months.”
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