United Kingdom: Composite PMI records worst reading since February in December
The IHS Markit/CIPS Flash Composite Purchasing Managers’ Index (PMI) fell to 53.2 in December from November’s 57.6. December’s result marked the weakest reading since February. However, the index remained above the 50-threshold, pointing to a continued, albeit moderating, improvement in business conditions from the previous month.
The lower reading was largely the result of a sharp slowdown in the services sector, amid the rise of the Omicron variant and ensuing restrictions on domestic activity and travel. Total new business growth in the sector was the weakest since March. The manufacturing PMI also fell, albeit only marginally. Manufacturing output growth accelerated on signs that the supply chain crisis had stabilized somewhat, although Brexit-related trade difficulties continued to hamper exports. In the private sector as a whole, inflationary pressures eased from November’s record high, while business sentiment weakened—particularly among firms in consumer-facing services.
Regarding the near-term outlook, Chris Williamson, chief business economist at IHS Markit, commented:
“With Covid-19 infections set to rise further in coming weeks due to the spread of the Omicron variant, and more restrictions being introduced, the pace of economic growth looks likely to continue to weaken as we head into 2022. The bigger uncertainty will be on how rising infection rates both at home and abroad might cause further supply and labour shortages, and whether this means the easing of inflationary pressures seen in December proves frustratingly short-lived.”