United Kingdom: December services and manufacturing PMIs suggest a weak end to Q4
The IHS Markit/CIPS UK services Purchasing Managers’ Index (PMI) decreased from 49.3 in November to 49.0 in December according to flash data, below the threshold that separates expansion from contraction in activity. It should be noted that the services PMI does not cover certain subsectors such as retail, education and health, meaning the PMI does not reflect the services sector in its entirety—this likely explains in part why the service sector has continued to expand moderately according to GDP data, despite recent depressed PMI readings. The IHS Markit/CIPS manufacturing PMI ticked down from a revised 48.9 in November (previously reported: 49.6) to 47.4 in December.
Firms reported that business activity was negatively impacted by Brexit uncertainty and tepid global economic momentum, while destocking by manufacturing firms further hurt output. Moreover, private-sector employment declined, while input and output price inflation was fairly mild. Taken together, the average PMI readings for the service and manufacturing sectors hint at a limp Q4 outturn, which is in line with FocusEconomics panelists’ projections.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, commented: “the Brexit path is still littered with obstacles and the need for strong negotiation skills for a future EU agreement will be paramount to avoid this downward slide becoming the economic landscape for an extended period.”