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United Kingdom PMI October 2021

United Kingdom: Composite PMI improves in October, although price pressures and supply shortages intensify

The IHS Markit/CIPS Flash Composite Purchasing Managers’ Index (PMI) came in at 56.8 in October, up from September’s 54.9. As a result, the index moved further above the 50-threshold, signaling a faster improvement in business conditions compared to the previous month.

The reading was driven by higher PMIs for both the manufacturing and services sectors, as the rollback of pandemic restrictions boosted demand and led firms to increase employment. However, manufacturing firms reported shortages of workers and inputs, with output growth slowing to an eight-month low as a result, and backlogs of new work rising. Meanwhile, input cost inflation rose to a record high, with output charges also rising at a record pace as a result.

Regarding October’s reading, Chris Williamson, chief business economist at IHS Markit, commented:

“The UK economy picked up speed again in October, but the expansion is looking increasingly dependent on the service sector, which in turn looks prone to a slowdown amid the recent rise in Covid-19 cases. Growth is also being accompanied by an unprecedented rise in inflationary pressures, which will inevitably feed through into higher consumer prices in coming months.”

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