By Ian McConnell

THE UK private-sector economy is shrinking at the fastest pace since July 2016, with manufacturing output tumbling and services activity recording consecutive monthly falls for the first time since 2009 amid Brexit uncertainty, a key reading shows.

Manufacturing production volumes have plunged at the fastest pace since July 2012 so far this month, amid export weakness.

The flash UK composite purchasing managers’ index, compiled by IHS Markit and published yesterday by the Chartered Institute of Procurement & Supply, signals the private-sector economy is recording its third monthly contraction in the space of four months in December.

The composite PMI has dropped from 49.3 in November to 48.5 this month on a seasonally adjusted basis, moving further below the level of 50 deemed to separate expansion from contraction to show the sharpest decline in private-sector activity since the month after the 2016 Brexit vote.

And private-sector employment is falling for a fourth consecutive month in December, according to the CIPS report.

CIPS said the decline in private-sector employment was “often linked to subdued order books and delays to decision-making in the lead-up to the General Election”.

It said: “Survey respondents overwhelmingly attributed lower business activity to a combination of domestic political uncertainty, a lack of clarity in relation to Brexit and subdued global economic conditions.”

CIPS noted a sustained fall in new business intakes had led to the sharpest reduction in backlogs of work since July 2016.

Chris Williamson, chief business economist at IHS Markit, said of the composite PMI reading: “The latest decline was the second-largest recorded over the past decade, and increases the likelihood that the economy contracted slightly in the fourth quarter as Brexit-related uncertainty intensified in the lead-up to the General Election. Manufacturing production is falling at a rate exceeded only once since the height of the global financial crisis in early 2009.”